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IIFL Securities Ltd.

BSE: 542773 Sector: Financials
NSE: IIFLSEC ISIN Code: INE489L01022
BSE 00:00 | 15 Jun 74.05 2.30
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NSE 00:00 | 15 Jun 74.00 2.40
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OPEN 72.05
PREVIOUS CLOSE 71.75
VOLUME 119877
52-Week high 80.90
52-Week low 32.65
P/E 12.99
Mkt Cap.(Rs cr) 2,243
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 72.05
CLOSE 71.75
VOLUME 119877
52-Week high 80.90
52-Week low 32.65
P/E 12.99
Mkt Cap.(Rs cr) 2,243
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IIFL Securities Ltd. (IIFLSEC) - Auditors Report

Company auditors report

To The Members of IIFL Securities Limited (formerly Known as India Infoline Limited)

Report on the Audit of the Standalone Ind AS financial statements

Opinion

We have audited the standalone Ind AS financial statements of IIFL Securities Limited (formerly known as India Infoline Limited) (the Company) which comprise the Balance Sheet as at 31st March 2020 the Statement of Profit and Loss Statement of Changes in Equity and Statement of Cash Flows for the year then ended and notes to the financial statements including a summary of significant accounting policies and other explanatory information (hereinafter referred to as the financial statements).

In our opinion and to the best of our information and according to the explanations given to us the aforesaid financial statements give the information required by the Companies Act 2013 (the Act) in the manner so required and give a true and fair view in conformity with Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended (Ind AS) and other accounting principles generally accepted in India of the state of affairs of the Company as at March 312020 profit total comprehensive income changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the financial statements in accordance with the Standards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilities under those Standards are further described in the Auditor's Responsibilities for the Audit of the financial statements section of our report. We are independent of the Company in accordance with the Code of Ethics issued by the Institute of Chartered Accountants of India (ICAI) together with the ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI's Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion on the financial statements.

Key Audit Matters

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

Key Audit MatterResponse to Key Audit Matter
The Company's key financial accounting and reporting processes are highly dependent on the automated controls implemented in the Information Technology (IT) systems such that there exists a risk that gaps in the IT control environment could result in the financial accounting and reporting records being materially misstated.

The Company uses Oracle system as the General Ledger for overall financial reporting which is interfaced with other main systems viz. BO-Swaraj and BO-Mutual Fund that process transactions which impacts significant accounts.

We have identified 'IT systems and control' as Key audit matter since for the primary business segment (broking and commission income) the Company relies on automated processes and controls for recording of income.

We focused on General IT controls i.e. access management change management program development and computer operations control and IT application controls i.e. controls on relevant system based reconciliation system generated reports and system/application processing over key financial accounting reporting systems and control systems.

Our audit procedures to assess the effectiveness of IT system included the following:

 Performed walkthroughs to evaluate the design and implementation of key automated controls and tested the effectiveness of identified IT automated controls and IT systems in relation to financial accounting and reporting systems including general controls i.e. system access and system change management program development and computer operations.

 We tested design and operating effectiveness of key controls over user access management on test check basis which included granting access right new user creation removal of user rights and other preventive controls.

 We independently assessed password policies security configurations system generated reports and system interface controls on test check basis.
 Evaluating the design implementation and operating effectiveness of identified significant accounts related IT automated controls which are relevant for accuracy of system calculation and consistency of data transmission on test check basis.
 We have also relied on the reports of IT Systems and Controls testing carried to the extent carried out out by Internal Auditors with respect to IT access controls and Systems audit conducted by the systems auditor appointed for this purpose and their observations. The internal auditors / system auditors have not observed any major deficiency.

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

The Company's Board of Directors is responsible for the preparation of the other information. The other information comprises the information included in the Board's Report including Annexures to Board's Report but does not include the financial statements and our auditor's report thereon.

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

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

If based on the work we have performed on the other information obtained prior to the date of this auditor's report we conclude that there is 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 and Those Charged with Governance for the Financial Statements

The Company's Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these financial statements that give a true and fair view of the financial position financial performance total comprehensive income changes in equity and cash flows of the Company in accordance with the accounting principles generally accepted in India including the Indian accounting standards specified under Sec 133 of the Act. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the accuracy and completeness of the accounting records relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement whether due to fraud or error.

In preparing the financial statements management is responsible for assessing the Company's ability to continue as a going concern disclosing as applicable matters related to going concern and using the going concern basis of accounting unless the management either intends to liquidate the Company or to cease operations or has no realistic alternative but to do so.

The Board of Directors are also responsible for overseeing 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 financial statements as a whole are free from material misstatement whether due to fraud or error and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if individually or in the aggregate they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

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

 Identify and assess the risks of material misstatement of the financial statements whether due to fraud or error design and perform audit procedures responsive to those risks and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error as fraud may involve collusion forgery intentional omissions misrepresentations or the override of internal control.

 Obtain an understanding of internal financial controls relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.

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

 Conclude on the appropriateness of management's use of the going concern basis of accounting and based on the audit evidence obtained whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists we are required to draw attention in our auditor's report to the related disclosures in the 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's report. However future events or conditions may cause the Company to cease to continue as a going concern.

 Evaluate the overall presentation structure and content of the financial statements including the disclosures and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

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

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

From the matters communicated with those charged with governance we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation precludes public disclosure about the matter or when in extremely rare circumstances we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such 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 in terms of Section 143(H) of the Act we give in Annexure A a statement on the matters specified in paragraphs 3 and 4 of the Order to the extent applicable.

2. 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 best of our knowledge and belief were necessary for the purposes of our audit of the financial statements.

b) In our opinion proper books of account as required by law have been kept by 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 Comprehensive Income) the Statement of changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account maintained for the purpose or preparation of the financial statements.

d) In our opinion the aforesaid financial statements comply with the Ind AS specified under section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014.

e) On the basis of the written representations received from the directors as on 31st March 2020 taken on record by the Board of Directors none of the directors is disqualified as on 31st March 2020 from being appointed as a director in terms of Section 164(2) of the Act.

f) With respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls refer to our separate Report in Annexure B.

g) With respect to the other matters to be included in the Auditor's Report in accordance with the requirements of section 197(16) of the Act as amended:

In our opinion and to the best of our information and according to the explanations given to us the remuneratio name=139948>n paid by the Company to its managing director during the year is in accordance with the provisions of section 197 of the Act.

h) With respect to the other matters 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 our information and according to the explanations given to us:

(i) The Company has disclosed the impact of pending litigations on its financial position in its financial statements- Refer Note No 30 of the financial statements.

(ii) The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses.

(iii) There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.

For V. Sankar Aiyar & Co.
Chartered Accountants
(FRN 109208W)
(G.SANKAR)
(M.No.46050)
UDIN: 20046050AAAABY8251
Place: Mumbai
Date: May 15 2020

Annexure A to the Independent Auditor's Report

Annexure referred to in our report of even date to the members of IIFL Securities Limited (formerly known as India Infoline Limited) on the accounts for the year ended 31st March 2020

(i) (a) The company is maintaining proper records showing full particulars including quantitative details and situation of fixed assets.

(b) As explained to us the assets have been physically verified by the management in accordance with a phased programme of verification which in our opinion is reasonable considering the size of the Company and nature of its fixed assets. According to the information and explanations given to us no material discrepancies have been noticed on such physical verification.

(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company the title deeds of immovable properties which are freehold are held in the name of the Company.

(ii) The Company is not carrying on any trading or manufacturing activity. Therefore Para 3(ii) of the Order is not applicable to the Company

(iii) The Company has granted loans unsecured to 6 companies covered in the register maintained under Section 189 of the Companies Act 2013:

(a) In our opinion the rate of interest and other terms and conditions on which the loans had been granted to the Companies were not prima facie prejudicial to the interests of the Company;

(b) The borrowers have been regular in the payment of the principal and interest as stipulated;

(c) There are no overdue amounts as at the balance sheet date in respect of these loans.

(iv) According to the information and explanations given to us the company has complied with the provisions of section 185 and 186 of the Act with respect to the loans investments guarantees and securities made as applicable.

(v) The Company has not accepted any deposits from the public within the meaning of Section 73 to 76 or any other relevant provisions of the Act and Rules framed thereunder. We are informed that no order has been passed by the Company Law Board or National Company Law Tribunal or Reserve Bank of India or any court or other tribunal.

(vi) According to the information and explanations given to us in respect of the class of industry the company falls under the Central Government has not prescribed the maintenance of cost records under Section 148(1) of the Act. Therefore paragraph 3(vi) of the Order is not applicable to the Company.

(vii) (a) According to the information and explanations given to us the Company is generally regular in depositing undisputed statutory dues including provident fund employees state insurance income tax service tax sales tax value added tax goods and services tax cess and other statutory dues as applicable to the Company with the appropriate authorities. Further as explained there are no undisputed statutory dues outstanding for more than six months as at 31st March 2020 from the date they became payable;

(b) According to the information and explanations given to us and records of the Company examined by us there are no cases of nondeposit of disputed dues of income tax or sales tax or goods and services tax or duty of customs or duty of excise. However according to the information and explanations given to us the following dues of service tax has not been deposited by the Company on account of dispute:

Nature of the StatuteNature of the DisputeAmount of Tax (Rs in Millions)Period to which amount relatesForum where dispute is pending
Service Tax 1994Service Tax on Delayed Payment ChargesRs 264.45 Outstanding out of total demand of Rs 272.2001.04.214 to 31.03.2016CESTAT
Service Tax 1994Service Tax on Fll - BrokerageRs 101.35 Outstanding out of total demand of Rs 105.2901.04.214 to 30.09.2014CESTAT

(viii) According to the information and explanation given to us and based on our audit procedures the company has not defaulted in repayment of loans to banks. The Company has not taken any loans or borrowings from Government or financial institutions and did not have any dues to debenture holders.

(ix) According to the information and explanations given to us the Company has not raised any moneys by way of initial public offer or further public offer (including debt instruments) and term loans during the year.

(x) According to the information and explanations given to us and based on the audit procedures performed and the representations obtained from the management we report that no fraud by the company or on the Company by its officers or employees having a material misstatement on the financial statements has been noticed or reported during the period under audit.

(xi) According to the information and explanations given to us and based on verification of records the managerial remuneration has been paid in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V of the Companies Act 2013.

(xii) In our Opinion and according to the information and explanations given to us the Company is not a Nidhi Company and hence clause (xii) of the order is not applicable to the Company.

(xiii) According to the information and explanation given to us and based on verification of the records and approvals of the Audit Committee all transactions with the related parties are in compliance with sections 177 and 188 of Companies Act 2013 where applicable and the details have been disclosed in the Financial Statements etc. as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and based on our examination of the records of the Company the company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year.

(xv) According to the information and explanations given to us the company has not entered into any non-cash transactions with directors or persons connected with him. Therefore paragraph 3(xv) of the Order is not applicable to the Company.

(xvi) According to the information and explanations given to us the company is not required to be registered under Sec 45-1A of the Reserve Bank of India Act 1934.

For V. Sankar Aiyar & Co.
Chartered Accountants
(FRN 109208W)
(G.SANKAR)
(M.No.46050)
UDIN: 20046050AAAABY8251
Place: Mumbai
Date: May 15 2020

Annexure referred to in our report of even date to the members of IIFL Securities Limited (formerly Known as India Infoline Limited) on the standalone accounts for the year ended 31st March 2020

Report on the Internal Financial Controls 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 IIFL Securities Limited (formerly Known as India Infoline Limited) (the Company) as of March 31st 2020 in conjunction with our audit 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 responsiblefor establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India.

These responsibilities include the design implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business including adherence to company's policies the safeguarding of its assets the prevention and detection of frauds and errors the accuracy and completeness of the accounting records and the timely preparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the Guidance Note) and the Standards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 to the extent applicable to an audit of internal financial controls both applicable to an audit of Internal Financial Controls and both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adeguacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting assessing the risk that a material weakness exists and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the auditor's judgement including the assessment of the risks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Company's internal financial controls system overfinancial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles and that receipts and expenditures of the company are being made only in accordance with authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition use or disposition of the company'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 financial reporting including the possibility of collusion or improper management override of controls material misstatements due to error or fraud may occur and not be detected. Also projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 312020 based on the internal control over financial reporting criteria established by the Company considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the Institute of Chartered Accountants of India.

For V. Sankar Aiyar & Co.
Chartered Accountants
(FRN 109208W)
(G.SANKAR)
(M.No.46050)
UDIN: 20046050AAAABY8251
Place: Mumbai
Date: May 15 2020