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Indbank Merchant Banking Services Ltd.

BSE: 511473 Sector: Financials
NSE: INDBANK ISIN Code: INE841B01017
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VOLUME 18926
52-Week high 37.25
52-Week low 9.31
P/E 18.88
Mkt Cap.(Rs cr) 94
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 21.30
CLOSE 21.00
VOLUME 18926
52-Week high 37.25
52-Week low 9.31
P/E 18.88
Mkt Cap.(Rs cr) 94
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Indbank Merchant Banking Services Ltd. (INDBANK) - Auditors Report

Company auditors report

To The Members of INDBANK MERCHANT BANKING SERVICES LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone financial statements of INDBANK MERCHANTBANKING SERVICES LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2019 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 ended onthat date and a summary of the significant accounting policies and other explanatoryinformation (hereinafter referred to as "the standalone financial statements").In our opinion and to the best of our information and according to the explanations givento us the aforesaid standalone financial statements give the information required by theCompanies Act 2013 ("the Act") in the manner so required and give a true andfair view in conformity with the Indian Accounting Standards prescribed under Section 133of the Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended("Ind AS") and other accounting principles generally accepted in India of thestate of affairs of the Company as at March 31 2019 the profit and total comprehensiveincome changes in equity and its cash flows for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made thereunder and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI's Code ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.

Key Audit Matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matter described below to be theKey Audit Matters to be communicated in our report.

Key Audit Matter Auditor's Response
Contingent Liability
The contingent liability as defined in AS 29 - provisions contingent liability and contingent assets requires assessment of probable outcomes and cash flows. The identification and quantification of contingent liabilities require estimation and judgment by management. (Refer Note 28) We have carried out the validation of information provided by the management by performing the following procedures
? Evaluating reasonableness of the underlying assumptions
? Understanding the current status of the litigations / tax assessments.
? Examinations of recent orders and / or communication received from various tax authorities / judicial forums and follow up action thereon.
? Examining the relevant documents on record
? Getting management confirmation where-ever necessary

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

The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial 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 during the course of our audit or otherwise appears to be materially misstated.If based on the work we have performed we conclude that there is a material misstatementof this other information we are required to report that fact. We have nothing to reportin this regard

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair view of the financial position financial performance totalcomprehensive income changes in equity and cash flows of the Company in accordance withthe Ind AS and other accounting principles generally accepted in India. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error. In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting 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 responsible for overseeing the Company's financial reportingprocess.

Auditor's Responsibilities for the Audit of the Standalone Financial Statements

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 inaccordance with SAs we exercise professional judgment and maintain professionalskepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error 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 financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) of the Act we are also responsible for expressing our opinion on whether theCompany has adequate internal financial controls system in place and the operatingeffectiveness of such 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 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 standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation. Materiality is the magnitude of misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in

(i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified 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 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 withthose charged with governance we determine those matters that were of most significancein the audit of the standalone financial statements of the current period and aretherefore the key audit matters. We describe these matters in our auditor's report unlesslaw or regulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication

Report on Other Legal and Regulatory Requirements

1) As required by the Companies (Auditors' 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 "Annexure A" a statement on the matters specified inparagraphs 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 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 Cash Flow Statement and theStatement of Changes in Equity dealt with by this Report are in agreement with therelevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the IndianAccounting Standards specified under Section 133 of the Act read with relevant rulesissued thereunder;

e) On the basis of written representations received from the directors as on 31 March2019 and taken on record by the Board st of Directors none of the directors isdisqualified as on 31 March 2019 from being appointed as a director in terms of stSection 164 (2) of the Act;

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls we give ourseparate Report in "Annexure B".

g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act

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

i. The Company has disclosed the impact of pending litigations on its financialposition in Note 28 to its standalone 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 includingderivative contracts.

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

3) As required by section 143(5) we have included in "Annexure C" astatement on the matters specified in the directions issued by the Comptroller and AuditorGeneral of India and in our opinion no action is required to be taken thereon and thereis no impact on the accounts and the financial statements of the company.

For M.Srinivasan & Associates
Chartered Accountants
FRN 004050S
S.Santhosh
Date : 18 May 2019 th Partner
Place : Chennai M.No : 230839

ANNEXURE A

Referred to in paragraph 1 under 'Report on other Legal and Regulatory Requirements' ofour report of even date

1) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets; (b) The Fixed Assets have beenphysically verified by the management in a phased manner designed to cover all the itemsover a period of three years which in our opinion is reasonable having regard to thesize of the company and nature of its business. Pursuant to the program a portion of thefixed asset has been physically verified by the management during the year and no materialdiscrepancies between the books records and the physical fixed assets have been noticed.

(c) The title deeds of immovable properties are held in the name of the company.

2) The Company is in the business of providing Broking Depository Participant servicesand Merchant banking services. Accordingly reporting under clause 3 (ii) of the order isnot applicable to the Company. Also the Company is into the proprietary investment in theshares. These shares are part of the inventory and disclosed in the financialsaccordingly.

3) According to the information and explanations given to us the Company has notgranted any secured or unsecured loans to any company firms or any other party covered inthe register maintained u/s 189 of the companies act.

4) According to the information and explanations given to us the Company has notdirectly or indirectly advanced loan to the persons covered under section 185 and 186 ofthe Act or given guarantees or securities in connection with the loan taken by suchpersons

5) The Company has not accepted any deposits from the public and hence the directivesissued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any otherrelevant provisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 withregard to the deposits accepted from the public are not applicable.

6) As informed to us the maintenance of Cost Records has not been specified by theCentral Government under sub-section (1) of Section 148 of the Act in respect of theactivities carried on by the company.

7) According to information and explanations given to us and on the basis of ourexamination of the books of account and records

a) the Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income-Tax Sales Tax Service TaxGoods and Service Tax Duty of Customs Duty of Excise Value added Tax Cess and anyother statutory dues with the appropriate authorities.

b) According to the information and explanations given to us no undisputed amountspayable in respect of the above were in arrears as at March 31 2019 for a period of morethan six months from the date on when they become payable.

c) According to the information and explanation given to us there are no dues ofCustom duty Service Tax Value added Tax Sales Tax and Goods and Service Tax which havenot been deposited with the relevant authorities. Details of dues of Income tax and Exciseduty together with cess there on which have not been deposited as at 31st March 2019 onaccount of disputes are as stated below:

Name of the Statue Nature of Dues Disputed dues (Rs in lakhs) Period which it relates Forum where the dispute is pending Remarks
Income Tax act 1961 Income tax and interest 115.02 1992-93 Income Tax Appellate Tribunal
Income tax and interest 32.13 1998-99 Commissioner of income tax
Income tax and interest 617.47 2007-08 High court - Madras The company has paid Rs.18 Lakhs as per CIT Order for stay in petition filed by the company
Income tax and interest 1129.05 2008-09 High court - Madras The company has paid Rs.132 Lakhs as per CIT Order for stay in petition filed by the company
Income tax and interest 96.27 2009-10 Income Tax Appellate Tribunal
Income tax and interest 24.81 2014-15 Assessing Officer
Sales tax and VAT Laws Sales tax/ Additional Sales tax Penalty and Interest 14.20 1998-99 Commercial Tax Officer Tamil Nadu
Sales tax/ Additional Sales tax Penalty and Interest 12.05 1995-96 Commercial Tax Officer Tamil Nadu
Sales tax/ Additional Sales tax Penalty and Interest 10.48 1994-95 Commercial Tax Officer Tamil Nadu
Sales tax/ Additional Sales tax Penalty and Interest 0.50 1993-94 Commercial Tax Officer Tamil Nadu

8) According to the information and explanations given to us the Company has notdefaulted in the repayment of loans or borrowings to financial Institution(s) and bank(s).

9) The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable to the Company.

10) 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 anyinstances of fraud by the Company or any fraud on the company by its officers oremployees noticed or reported during the year nor have we been informed of any suchinstance by the management.

11) Based upon the audit procedures performed and the information and explanationsgiven by the management the managerial remuneration has been paid or provided inaccordance with the requisite approvals mandated by the provisions of section 197 readwith Schedule V to the Companies Act;

12) In our opinion the Company is not a Nidhi Company. Therefore the provisions ofclause 3 (xii) of the Order are not applicable to the Company.

13) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 and the details have been disclosed in theFinancial Statements as required by the applicable accounting standards.

14) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year underreview. Accordingly the provisions of clause 3 (xiv) of the Order are not applicable tothe Company and hence not commented upon.

15) Based upon the audit procedures performed and the information and explanationsgiven by the management the company has not entered into any non-cash transactions withdirectors or persons connected with them. Accordingly the provisions of clause 3 (xv) ofthe Order are not applicable to the Company and hence not commented upon.

16) In our opinion the company is not required to be registered under section 45 IA ofthe Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi) ofthe Order are not applicable to the Company and hence not commented upon.

For M.Srinivasan & Associates
Chartered Accountants
FRN 004050S
S.Santhosh
Date : 18 May 2019 th Partner
Place : Chennai M.No : 230839

ANNEXURE B

Referred to in paragraph 2(f) under "Report on other Legal and RegulatoryRequirements' of our report of even date

Report on the Internal Financial Controls over financial Reporting under clause (i) ofsub-section 3 of Section 143 of the Companies Act 2013 We have audited the internalfinancial controls over financial reporting of "INDBANK MERCHANT BANKING SERVICESLIMITED" as of 31 March 2019 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date. st

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 control statedin the Guidance Note on Audit of Internal Financial Control over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies act 2013.

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing deemed to be prescribed under Section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth issued by the ICAI. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was 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 system 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 risk ofmaterial misstatement of the financial statements whether due to fraud or error.

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

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 purpose 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 andexpenditure of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized 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.Also projections of any evaluation of the internal financial control over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on audit of Internal financialcontrol Over Financial Reporting issued by The Institute of Chartered Accountants ofIndia.

For M.Srinivasan & Associates
Chartered Accountants
FRN 004050S
S.Santhosh
Date : 18 May 2019 th Partner
Place : Chennai M.No : 230839

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