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IL&FS Investment Managers Ltd.

BSE: 511208 Sector: Financials
NSE: IVC ISIN Code: INE050B01023
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OPEN 6.04
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VOLUME 57640
52-Week high 9.52
52-Week low 3.60
P/E
Mkt Cap.(Rs cr) 185
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 6.04
CLOSE 5.88
VOLUME 57640
52-Week high 9.52
52-Week low 3.60
P/E
Mkt Cap.(Rs cr) 185
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

IL&FS Investment Managers Ltd. (IVC) - Auditors Report

Company auditors report

TO THE MEMBERS OF IL&FS INVESTMENT MANAGERS LIMITED

Report on the Audit of Standalone Ind AS Financial Statements

Qualified Opinion

1. We have audited the accompanying Standalone Ind AS Financial Statements of IL&FSInvestment Managers Limited (‘the Company') which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the year thenended and notes to the financial statements including a summary of significantaccounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible impacts of the matters described in the ‘Basisfor Qualified Opinion' paragraph below the aforesaid Ind AS Financial Statements give theinformation required by the Companies Act 2013 (‘the Act') in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at March 31 2020 and itsprofit (including other comprehensive income) changes in equity and its cash flows forthe year ended on that date.

Basis for Qualified Opinion

2. Attention is drawn to Note 31 of the standalone Ind AS Financial Statements whichdescribes the situation faced by the Company in view of the ongoing investigation bySerious Fraud Investigation Office of Ministry of Company Affairs (SFIO) againstInfrastructure Leasing & Financial Services Limited (‘IL&FS' or ‘theUltimate Holding Company') and its subsidiaries (including the Company). Further theNational Company Law Tribunal (NCLT) has ordered re-opening of books of accounts ofIL&FS and its two subsidiaries (other than this Company) for the past financial yearsas referred to in the note. In view of the aforesaid ongoing investigations of the entireIL&FS Group (including the Company) by the SFIO and re-opening of books of accounts ofthe Holding Company and two of its subsidiaries by the NCLT we are unable to comment onthe consequential impact(s) upon conclusion of the said investigation and re-opening ofthe books of account on these standalone Ind AS Financial Statements.

3. We conducted our audit in accordance with the Standards on Auditing("SAs") specified under Section 143(10) of the Act.

Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements Section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India (‘ICAI') 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 qualified opinion.

Material uncertainty relating to going Concern

4. Attention is drawn to Note 32 of the Standalone Ind AS Financial Statementsregarding reduction in the Company's fee revenue significantly coupled with the lack ofany immediate new fund raise resulting in the reduced estimates of future fee revenuethere is material uncertainty of the Company's continuity as going concern. Howeverconsidering management's expectations of Company's ability to at least meet itsobligations over the next 12 months out of its earnings and liquid assets and its businessplans for new fund raise post completion of the stake sale despite prevailing uncertaintywith regard to such stake sale the management believes that use of the ‘goingconcern' assumption for preparation of the standalone Ind AS Financial Statements isappropriate. Our opinion is not modified in respect of this matter.

Emphasis of Matter

5. Attention is drawn to Note 34 of the Standalone Ind AS Financial Statements whichdescribes the impacts of COVID-19 Pandemic on the financial results as also on businessoperations of the Company assessment thereof made by the management of the Company basedon its internal external and macro factors involving certain estimation uncertainties offuture periods. Our opinion is not modified in respect of this matter.

Key Audit Matters

6. Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements for the year underaudit. These matters were addressed in the context of our audit of the Standalone Ind ASFinancial Statements as a whole and in forming our opinion thereon we do not provide aseparate opinion on these matters. In our professional judgement we have concluded thatthere are no reportable Key Audit Matters to be communicated in our report.

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

7. The Company's Board of Directors is responsible for the preparation of the otherinformation comprising of the information included in the Management Discussion andAnalysis Directors' Report including Annexures to Directors' Report and such otherdisclosures related Information excluding the standalone Ind AS Financial Statements andauditors report thereon (‘Other Information'). The other information is expected tobe made available to us after the date of this auditors' report. Our opinion on thestandalone Ind AS Financial Statements does not cover the other information and we do notexpress any form of assurance conclusion thereon. In connection with our audit of thestandalone Ind AS Financial Statements our responsibility is to read the otherinformation when it becomes available and in doing so consider whether the otherinformation is materially inconsistent with the standalone Ind AS financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated. When we read the other Information and if we conclude that there isa material misstatement therein we are required to communicate the matter to thosecharges with governance as required under SA 720 ‘The Auditor's ResponsibilitiesRelating to Other Information'.

Responsibility of Management for Standalone Ind AS Financial Statements

8. The Company's Management and Board of Directors is responsible for the mattersstated in Section 134(5) of the Act with respect to the preparation of these Ind ASFinancial 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 the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under prescribed Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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;design 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 Ind AS Financial Statementsthat give a true and fair view and are free from material misstatement whether due tofraud or error. In preparing the Ind AS Financial Statements management is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative 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 the Standalone Ind AS Financial Statements

9. Our objectives are to obtain reasonable assurance about whether the Ind AS 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 Standalone Ind AS Financial Statements. Our audit process in accordancewith the SAs is narrated in Annexure 1 to this report.

Other Matters

10. The entire audit finalization processes were carried from remote locations i.e.other than the office of the Company where books of account and other records are keptbased on data/details or financial information provided to us through digital mediumowing to lockdown imposed by the Government to restrict the spread of COVID-19. Beingconstrained we resorted to and relied upon the results of the related alternate auditprocedures to obtain appropriate audit evidence for the significant matters in course ofour audit. Our report is not modified in respect of this matter.

11. The comparative financial information of the Company for the year ended / as atMarch 31 2019 included in these Standalone Ind AS financial statements are based on thepreviously issued Financial Statements audited by BSR & Associates LLP (‘theErstwhile Auditors') for the year ended March 31 2019 whose report dated May 30 2019expressed a qualified opinion on those Standalone Ind AS financial statements. The subjectmatters of qualifications in the audit report of the Erstwhile Auditors have beenconsidered and dealt with while framing this report. Our opinion is not modified inrespect of this matter.

Report on other Legal and Regulatory Requirements

12. 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 Act we give in the Annexure 2 a statement on the matters specified in paragraphs 3and 4 of the Order.

13. 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. Except for the possible impacts of the matters described in the ‘Basis forQualified Opinion' paragraph above in our opinion proper books of account as required bylaw have been kept by the Company so far as it appears from our examination of thosebooks.

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

d. According to the information and explanations given to us by the management of theCompany in our opinion the aforesaid Standalone Ind AS Financial Statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 3 of theCompanies (Accounting Standards) Rules 2015.

e. The matter relating to going concern described under para 4 above and mattersrelating to investigation by SFIO against IL&FS and its subsidiaries (including theCompany) and NCLT order of re opening of books of accounts of IL&FS and its twosubsidiaries (other than this Company) for the past financial years described under‘Basis for Qualified Opinion' paragraph above in our opinion may have an adverseeffect on the functioning of the Company depending on final outcome of these matters.

f. 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.

g. 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 3.

h. As per the information and explanations given to us in our opinion remunerationpaid by the Company to its Directors (sitting fees) during the year under report is inaccordance with the provision of section 197 of the Act.

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

(i) There are no pending litigations against the Company;

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

(iii) There has been no delay in transferring the amounts which were required to betransferred to the Investor Education and Protection Fund by the Company.

For Khimji Kunverji & Co LLP
Chartered Accountants
Firm's Registration No.: 105146W / W-100621
Hasmukh B. Dedhia
Partner (033494)
ICAI UDIN: 20033494AAAAHL3797
Mumbai
July 28 2020

Annexure 1 to the Independent Auditors' Report to the members of IL&FS InvestmentMangers Limited

[referred to in para 9 titled ‘Auditor's Responsibilities for the Audit of the IndAS Financial Statements']

As part of our 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 to design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

• Obtain an understanding of internal control relevant to the audit in order todesign 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 hasadequate internal financial controls system in place and the operating effectiveness ofsuch controls.

• 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.

• 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. We alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.

• From the matters communicated 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.

Annexure 2 to the Independent Auditors' Report to the members of IL&FS InvestmentManagers Limited

[referred to in para 12 under ‘Report on Other Legal and Regulatory Requirements']

i. (a) According to the information and explanation given to us the Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) As informed to us the company has a regular programme of physical verification ofits fixed assets by which all the fixed assets are physically verified annually by theManagement. In our opinion the frequency of physical verification is reasonable havingregard to the size of the Company and nature of its business; According to the informationand explanations given to us no material discrepancies were noticed on such verification.

(c) In our opinion and according to the information and explanations given to us and onthe basis of our examination of the records of the Company there is no immovable propertyheld by the Company during the year.

ii. The business operations of the Company comprising of rendering fund management andadvisory services do not require holding of any inventories. Thus paragraph 3 (ii) of theOrder is not applicable to it.

iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms limited liabilitypartnerships or other parties covered in the register maintained under Section 189 of theAct. Therefore the requirement of clause (iii)(a) (iii)(b) and (iii)(c) of paragraph 3of the Order are not applicable to the company.

iv. In our opinion and according to the information and explanations given to us theCompany has not granted any loans or provided any guarantees or securities covered underSection 185 and 186 of the Act and in respect of Investments made by company provisionsof Section 186 of the Act have been complied with.

v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits from the public during the year in terms of theprovisions of Sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under. Accordingly paragraph 3 (v) of the Order is not applicable to theCompany.

vi. The maintenance of cost records has not been specified by the Central Governmentunder Section 148(1) of the Act for the business activities carried out by the Company.Thus reporting under paragraph 3 (vi) of the Order is not applicable.

vii. In respect of Statutory dues:

(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the

Company amounts deducted/accrued in the books of account in respect of undisputedstatutory dues including Provident

Fund Income-tax Goods and Service Tax cess and other material statutory dues havebeen generally regularly deposited during the year by the Company with the appropriateauthorities though there have been slight delays in few cases. Attention is invited toNote 13(a) of the standalone Ind AS Financial Statements regarding payment of Providentfund. As explained to us the Company did not have any dues on account of sales taxemployees' state insurance wealth tax duty of customs duty of excise and value addedtax.

(b) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no undisputed statutory dues payablein respect to the above statues outstanding as at March 31 2020 for a period of morethan six months from the date they became payable.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company there are no dues of Income Tax Sales-taxService tax Goods and Service Tax and Value added tax which have not been deposited as onMarch 31 2020 on account of disputes.

viii. In our opinion and according to the information and explanations given to us theCompany has not taken any loan or borrowing from financial institution banks orGovernment. The company has not issued any Debentures. Thus paragraph 3 (viii) of theOrder is not applicable to the Company.

ix. In our opinion and according to the information and explanations given to usCompany did not raise any money by way of initial public offer (including debtinstruments) and loans during the year. Hence paragraph 3 (ix) of the Order is notapplicable 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 fraud by the Company or any fraud on the Company by its officers or employeesnoticed or reported during the year nor have we been informed of any such instance by themanagement of the Company.

xi. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration during the year under report as per the provisions of section 197 of the Actread with Schedule V of the Act.

xii. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi company. Accordingly paragraph 3 (xii) of the Order is notapplicable to the Company.

xiii. According to the information and explanations given to us by the management andbased on our examination of the records of the Company the company is in compliance withthe provisions of Section 177 and 188 of the Companies Act 2013 where applicable anddetails of such transactions have been disclosed in the Standalone Ind AS FinancialStatements as required under applicable Indian Accounting Standards.

xiv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year. Accordingly paragraph 3 (xiv) of the Order is not applicable to the Company.

xv. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into non-cashtransactions with directors or persons connected with them. Accordingly paragraph 3 (xv)

of the Order is not applicable.

xvi. In our opinion the Company is not required to be registered under Section 45-IAof the Reserve Bank of India Act 1934

For Khimji Kunverji & Co LLP
Chartered Accountants
Firm's Registration No.: 105146W / W-100621
Hasmukh B. Dedhia
Partner (033494)
ICAI UDIN : 20033494AAAAHL3797
Place : Mumbai
Date : July 28 2020

Annexure 3 to the Independent Auditors' Report to the members of IL&FS InvestmentManagers Limited

[referred to in paragraph 13(g) under ‘Report on Other Legal and RegulatoryRequirements']

report on the Internal financial Controls with reference to financial statements underClause (i) of sub-section 3 of section 143 of the Act

Opinion

We have audited the internal financial controls with reference to financial statementsof IL&Fs Investment Managers Limited ("the Company") as of March 31 2020 inconjunction with our audit of the financial statements of the Company for the year endedon that date.

In our opinion the Company has an internal financial controls system over financialreporting design whereof needs to be enhanced to make it comprehensive. Based onverification of process controls matrices and other relevant documents made available tous for the financial year under report and thereafter in our opinion and considering theinternal control with reference to financial statements criteria established by theCompany considering the essential components of internal control stated in the GuidanceNote issued by the Institute of Chartered Accountants of India (the "GuidanceNote") the operating effectiveness of such process controls and appropriatedocumentation thereof needs to be strengthened to make the same commensurate with the sizeof the Company and nature of its business.

Management's responsibility for Internal financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to financial statementscriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note issued by the Institute of Chartered Accountants ofIndia ("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to thecompany's policies the safeguarding of its assets the prevention and detection of fraudsand errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols with reference to financial reporting based on our audit. We conducted our auditin accordance with the Guidance Note and the Standards on Auditing issued by ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlswith reference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 such internal financialcontrols assessing the risk that a material weakness exists & testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the Ind AS Financial Statements whether due to fraud orerror.

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

Meaning of Internal Financial Controls with reference to Financial statements

A Company's internal financial control 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 control withreference to financial statements includes those policies and procedures that:

(a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company.

(b) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of Ind AS Financial Statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the Company are being madeonly in accordance with authorisations of management and directors of the Company; and

(c) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the Company's assets that could have amaterial effect on the Ind AS Financial Statements.

Inherent Limitations of Internal Financial Controls with reference to FinancialStatements

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 with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.

For Khimji Kunverji & Co LLP
Chartered Accountants
Firm's Registration No.: 105146W / W-100621
Hasmukh B. Dedhia
Partner (033494)
ICAI UDIN : 20033494AAAAHL3797
Place: Mumbai
Date: July 28 2020

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