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IDFC Ltd.

BSE: 532659 Sector: Financials
NSE: IDFC ISIN Code: INE043D01016
BSE 00:00 | 06 Dec 50.20 -1.30
(-2.52%)
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52.35

HIGH

52.35

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50.00

NSE 00:00 | 06 Dec 50.20 -1.30
(-2.52%)
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51.75

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OPEN 52.35
PREVIOUS CLOSE 51.50
VOLUME 436315
52-Week high 64.40
52-Week low 35.15
P/E 313.75
Mkt Cap.(Rs cr) 8,014
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 52.35
CLOSE 51.50
VOLUME 436315
52-Week high 64.40
52-Week low 35.15
P/E 313.75
Mkt Cap.(Rs cr) 8,014
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IDFC Ltd. (IDFC) - Auditors Report

Company auditors report

TO THE MEMBERS OF IDFC LIMITED

Report on the audit of the Standalone financial statements

Opinion

1. We have audited the accompanying standalone financial statements of IDFC Limited(“the Company”) which comprise the balance sheet as at March 31 2020 and thestatement of Profit and Loss(including Other Comprehensive Income) statement of changesin equity and statement of cash flows for the year then ended and notes to the financialstatements including a summary of significant accounting policies and other explanatoryinformation.

2. In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 (“the Act”) in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and total comprehensive income(comprising of profit and other comprehensive income)changes in equity and its cash flowsfor the year then ended.

basis for opinion

3. We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act 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.

Emphasis of matter

4. We draw your attention to Note 44 to the financial statements which describes themanagement's assessment of the impact of the outbreak of Coronavirus (Covid-19) on thebusiness operations of the Company. As mentioned in the note necessary adjustment weremade by the management to the financial statements consequent to the impact of theoutbreak of Covid-19 however in view of the various preventive measures taken (such ascomplete lock-down restrictions by the Government of India travel restrictions etc.) andhighly uncertain economic environment a definitive assessment of the impact on thesubsequent periods is highly dependent upon circumstances as they evolve. Our opinion isnot modified in respect of this matter.

Key audit matters

5. 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.

key audit matter
Impairment assessment on the Investment carried at cost The audit procedures performed by us to check the impairment allowance on investments include the following:
(Refer to note 7 to the financial statements.)
The Company has gross Investments aggregating to Rs. 9326.99 crores in subsidiaries and associates and the associated impairment allowances aggregated to Rs. 95.67 crores which are significant to the financial statements. • We understood and tested design and operating effectiveness of the key controls over -
? the Management assessment of triggers for impairment assessment;
Impairment allowances represent management's estimate within the investment portfolios at the balance sheet date and are inherently judgmental. ? the completeness and accuracy of source data used by the Management in the impairment allowance computation.
The impairment assessment under Ind-AS 36'Impairment of Assets' requires an assessment of the investment basis various parameters including but not limited to the net worth of the underlying investments significant change in the economic environment and basis other internal and external information which may affect adversely to these investments in subsidiaries and associates. Each assessment is subject to (significant) judgement and estimation uncertainty e.g. future level of business at the subsidiaries and associates. ? review of impairment allowance computations for its reasonableness by the management.
• We evaluated and validated various parameters considered by the Management for assessment of impairment allowance.
• We also checked the completeness and accuracy of source data used.
Given the inherent subjectivity in the assessment of the above investments identifying triggering events for impairment and performing impairment testing involves significant judgement and given the combined magnitude of the assets at risk we determined this to be a key audit matter. • We recomputed the impairment allowance for the investments across the portfolio to ensure arithmetical accuracy and compliance with the requirements of related accounting standard (Ind AS 36).
• We evaluated the adequacy of presentation and disclosures in relation to impairment loss allowance in the standalone financial statements.
Based on the procedures performed above the provision for impairment as recognized by the management in standalone financial statements is considered to be reasonable.

other Information

6. 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 Reasonability ReportCorporate Governance and Shareholder's Information but does not include the financialstatements and our auditor's report 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 in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed and the reports of the other auditors as furnished to us we conclude that thereis a material misstatement of this other information we are required to report that fact.

We have nothing to report in this regard.

Responsibilities of management for the financial statements

7. The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under section133 of the Act This responsibility also includes maintenance of adequate accountingrecords in accordance with the provisions of the Act for safeguarding of the assets of theCompany and for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

8. In preparing the financial statements management is responsible for assessing theCompany'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. Those Board of Directors are also responsible for overseeing theCompany's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

9. 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.

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

• Identify and assess the risks of material misstatement of the 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 todesign audit procedures that are appropriate in the circumstances.

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

• Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our 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 financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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

12. We also provide those charged with governance with a statement that we havecomplied with relevant ethical requirements regarding independence and to communicatewith them all relationships and other matters that may reasonably be thought to bear onour independence and where applicable related safeguards.

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

Report on other legal and regulatory requirements

14. As required by the Companies (Auditor's Report) Order 2016 (“theOrder”) issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure B a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.

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

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and Cash Flow Statement dealt with by thisReport are in agreement with the books of account.

d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2020 taken on 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.

f) With respect to the adequacy of the internal financial controls with reference tofinancial statements of the Company and the operating effectiveness of such controlsrefer to our separate Report in “Annexure A”.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements - Refer Note 31 to the financial statements

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts - Refer Note 16to the financial statements the Company does not have any derivative contracts;

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The reporting on disclosures relating to Specified Bank Notes is not applicable tothe Company for the year ended March 31 2020.

16. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Russell I. Parera
Partner
Membership Number: 42190
UDIN: 20042190AAAABT7666
Place: Mumbai
Date: June 25 2020

ANNEXURE A TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 15(f) of the Independent Auditors' Report of even date to themembers of IDFC Limited on the standalone financial statements for the year ended March31 2020

Report on the Internal Financial Controls with reference to financial statements underClause (i) of Sub-section 3 of Section 143 of the Act

1. We have audited the internal financial controls with reference to financialstatements of IDFC Limited (“the Company”) as of March 31 2020 in conjunctionwith our audit of the standalone financial statements of the Company for the year ended onthat date.

Management's responsibility for Internal financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India (ICAI). These responsibilitiesinclude the designimplementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial statements based on our audit. We conducted our auditin accordance with the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting (the“Guidance Note”) and the Standards on Auditing deemed tobe prescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of internal financial controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls with reference to financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgement including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.

5. 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 systemwith reference to financial statements.

Meaning of Internal Financial Controls with reference to financial statements

6. A company's internal financial controls with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial controlswith reference to financial statements includes those policies and procedures that (1)pertain to the maintenance of records that in reasonable detailaccurately and fairlyreflect the transactions and dispositions of the assets of the company; (2)providereasonable assurance that transactions are recorded as necessary to permit preparation offinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.

Inherent Limitations of Internal Financial Controls with reference to financialstatements

7. Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control controls with reference to financial statements may becomeinadequate because of changes in conditions or that the degree of compliance with thepolicies or procedures may deteriorate.

Opinion

8. In our opinion the Company has in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2020 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India.(Also refer paragraph 4 of themain audit report).

For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Russell I. Parera
Partner
Membership Number: 42190
UDIN: 20042190AAAABT7666
Place: Mumbai
Date: June 25 2020

ANNEXURE B TO INDEPENDENT AUDITORS' REPORT

Referred to in paragraph 14 of the Independent Auditors' Report of even date to themembers of IDFC Limited on the standalone financial statements as of and for the yearended March 31 2020

i. (a) The Company is maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets are physically verified by the Management according to a phasedprogramme designed to cover all the items over a period of two years which in ouropinion is reasonable having regard to the size of the Company and the nature of itsassets. Pursuant to the programme a portion of the fixed assets has been physicallyverified by the Management during the year and no material discrepancies have been noticedon such verification.

(c) The Company does not own any immovable properties as disclosed in Note 10on fixedassets to the financial statements. Therefore the provisions of Clause 3(i)(c) of thesaid Order are not applicable to the Company.

ii. The Company is in the business of rendering services and consequently does nothold any inventory. Therefore the provisions of Clause 3(ii) of the said Order are notapplicable to the Company.

iii. The Company has not granted any loans secured or unsecured to companies firmsLimited Liability Partnerships or other parties covered in the register maintained underSection 189of the Act. Therefore the provisions of Clause 3(iii) (iii)(a) (iii)(b) and(iii)(c) of the said Order are not applicable to the Company.

iv. The Company has not granted any loans or provided any guarantees or security to theparties covered under Section 185 of the Act. Therefore the provisions of Section 185 arenot applicable to the Company. The Company is registered as a Non - Banking FinancialCompany - Investment Company with the Reserve Bank of India. Thus the provisions ofSection 186 except sub-section (1) of the Act is not applicable to the Company. In ouropinion and according to the information and explanations given to us during the yearthe Company has not made any investments through more than two layers of the investmentcompanies as mentioned in sub- section (1) of Section 186 of the Act.

v. The Company has not accepted any deposits from the public within the meaning ofSections 73 74 75 and 76 of the Act and the Rules framed there under to the extentnotified.

vi. The Central Government of India has not specified the maintenance of cost recordsunder sub-section (1) of Section 148 of the Act for any of the products of the Company.

vii. (a) According to the information and explanations given to us and the records ofthe Company examined by us in our opinion the

Company is generally regular in depositing the undisputed statutory dues in respect ofincome tax though there has been a slight delay in a few cases and is regular indepositing undisputed statutory dues including provident fund employees' stateinsurance goods and service tax and other material statutory dues as applicable withthe appropriate authorities.

Further for the period March 1 2020 to March 31 2020 the company has paid Goods andService Tax and filed GSTR 1 after the due date but within the timelines allowed byCentral Board of Indirect Taxes and Customs under the 35/2020 - Central tax dated April03 2020 on fulfilment of conditions specified therein.

(b) According to the information and explanations given to us and the records of theCompany examined by us there are no dues of goods and service tax which have not beendeposited on account of any dispute. The particulars of income-tax as at March 31 2020which have not been deposited on account of a dispute are as follows:

Name of the statute Nature of dues amount (Rs.) Period to which the amount relates forum where the dispute is pending
Income tax Act 1961 Income Tax 15341651 FY 2018-2019 Commissioner of Income tax appeals

viii. As the Company does not have any loans or borrowings from any financialinstitution or bank or Government nor has it issued any debentures as at the balancesheet date the provisions of Clause 3(viii) of the Order are not applicable to theCompany.

ix. The Company has not raised any moneys by way of initial public offer furtherpublic offer (including debt instruments) and term loans. Accordingly the provisions ofClause 3(ix) of the Order are not applicable to the Company.

x. During the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the Company or on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such case by theManagement.

xi. The Company has paid/ provided for managerial remuneration in accordance with therequisite approvals mandated by the provisions of Section 197 read with Schedule V to theAct.

Also refer paragraph 16 of our main audit report

xii. As the Company is not a Nidhi Company and the Nidhi Rules 2014 are not applicableto it the provisions of Clause 3(xii) of the Order are not applicable to the Company.

xiii. The Company has entered into transactions with related parties in compliance withthe provisions of Sections 177 and 188 of the Act. The details of related partytransactions have been disclosed in the financial statements as required under IndianAccounting Standard (Ind AS) 24 Related Party Disclosures specified under Section 133 ofthe Act.

xiv. The Company has not made any preferential allotment or private placement of sharesor fully or partly convertible debentures during the year under review. Accordingly theprovisions of Clause 3(xiv) of the Order are not applicable to the Company.

xv. The Company has not entered into any non cash transactions with its directors orpersons connected with him. Accordingly the provisions of Clause 3(xv) of the Order arenot applicable to the Company.

xvi. The Company is required to and has been registered under Section 45-IA of theReserve Bank of India Act 1934 as Systemically Important Non-deposit Accepting or HoldingNon-Banking Financial Company.

For Price Waterhouse & Co Chartered Accountants LLP
Firm Registration Number: 304026E/E-300009
Russell I. Parera
Partner
Membership Number: 42190
UDIN: 20042190AAAABT7666
Place: Mumbai
Date: June 25 2020

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