To the members of
KIFS Financial Services Limited
Report on the financial statements
We have audited the financial statements of KIFS FINANCIAL SERVICES LIMITED ("thecompany") which comprise the balance sheet as at March 31 2021 the statement ofprofit and loss (including other comprehensive income) and statement of cash flows for theyear then ended 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 the aforesaid 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 2021 the profit and total comprehensiveincome and its cash flows for the year ended on that date.
Basis for opinion
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 there under 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.
Key audit matters
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. Wehave no key audit matter to communicate in our report.
Information other than the 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 thefinancial statements 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 have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
Management's responsibility for the 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 financial statements that givea true and fair view of the financial position financial performance total comprehensiveincome and cash flows of the company in accordance with the Ind AS and other accountingprinciples generally accepted in India. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingthe assets of the company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.
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.
The board of directors are also responsible for overseeing the company's financialreporting process.
Auditor's responsibilities for the audit of the financial statements
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 aggregate they couldreasonably be expected to influence the economic decisions of users taken on the basis ofthese financial statements.
As part of an audit in accordance with standards of auditing (SAs) we exerciseprofessional judgment and maintain professional skepticism throughout the audit. We also:identify and assess the risks of material misstatement of the financial statementswhether due to fraud or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control; obtain anunderstanding of internal control relevant to the audit in order to design auditprocedures that are appropriate in the circumstances. Under section 143(3)(i) of the Actwe are also responsible for expressing our opinion on whether the company has adequateinternal financial controls system in place and the operatingeffectiveness of suchcontrols; evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and relateddisclosures made by management; conclude on theappropriateness of management's use of the going concern basis of accounting and based onthe audit evidence obtained whether a material uncertainty exists related to events orconditions that may cast significant doubt on the company's ability to continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the financial statementsor if such disclosures are inadequate to modify our opinion. Our conclusions are basedon the audit evidence obtained up to the date of our auditor's report. However futureevents or conditions may cause the company to cease to continue as a going concern;evaluate the overall presentation structure and content of the financial statementsincluding the disclosures and whether the financial statements represent the underlyingtransactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
1. As required by the Companies (Auditor's Report) Order 2016 ("the order")issued by the central government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the Annexure "A" a statement on the mattersspecified in paragraphs 3 and 4 of the order to the extent applicable.
2. As required by section 143(3) of the Act 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 and the statement of cash flow dealt with by this report are in agreement with thebooks of account;
(d) in our opinion the aforesaid financial statements comply with the AS specifiedunder 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 over financialreporting of the company and the operating effectiveness of such controls refer to ourseparate report in Annexure "B". Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the company's internal financial controls overfinancial reporting;
(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 opinion and to the best of our information and according to the explanationsgiven to us the remuneration paid by the company to its directors during the year is inaccordance with the provisions of section 197 of the Act and is within the limit specifiedunder the said section.
(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 does not have any pending litigations which would impact its financialposition;
II. The company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses; and
III. During the financial year under report i.e. 2020-21 the company has dulytransferred Rs. 160994/- the unclaimed and unpaid dividend amount for the financialyear 2012-13 to the investor education and protection fund.
Annexure "A" to the independent auditors' report
Referred to in paragraph 1 under the heading 'report on other legal & regulatoryrequirement' of our report of even date to the standalone financial statements of thecompany for the year ended March 31 2021.
1. (a) The company is maintaining proper records showing full particulars includingfull particulars including quantitative details and situation of fixed assets;
(b) As explained to us the company has regular programs of physical verification ofits fixed assets by which fixed assets are verified in a phase manner over a period of theyear. In accordance with this verification certain fixed assets were verified during theyear and no material discrepancies were noticed on such verification. In our opinion thisperiodicity of physical verification is reasonable having regard to the size of thecompany and the nature of its assets;
(c) As the company has no immovable property as fixed assets information requiredunder this para is not applicable.
2. The company is a non-banking finance company. Accordingly it does not hold anyphysical inventories. Thus paragraph 3(ii) of the order is not applicable to the company.
3. (a) According to the information and explanation given to us the company hasgranted loans secured or unsecured to companies firms limited liability partnerships orother related parties covered in the register maintained u/s 189 of the Companies Act theclosing balance due from the above parties as at March 31 2021 is Rs. 97.28 lakhs and themaximum amount involved during the year was Rs. 3795.28 lakhs. However the terms &conditions for grant of such loans are not prejudicial to the company's interest.
(b) In respect of loans granted to companies covered in the register maintained undersection 189 of the Companies Act 2013. The principal amounts are repayable on demand andthere is no repayment schedule.
(c) In respect of aforesaid loan specified in para 3(a) above there are no overdueamount.
4. In our opinion and according to the information and explanations given to us theprovisions of section 185 and 186 of the Act has been complied with considering theexemptions given to NBFC companies.
5. In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits within the meaning of section 73 to 76 of theCompanies Act 2013 and rules framed there under.
6. We have been informed by the management no cost audit records have been prescribedunder section 148(1) of the Companies Act 2013 in respect of financial services providedby the company.
7. 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 ofaccount in respect of undisputed statutory dues including income tax service tax andother material statutory dues have been generally regularly deposited during the year bythe company with the appropriate authorities. However in case of delays in few instancesthe same has been deposited along with interest due thereon.
According to the information and explanations given to us no undisputed amount payablein respect of income tax wealth tax value added tax service tax and other statutorydues applicable to the company were in arrears as on March 31 2021 for a period of morethan six months from the date become payable.
8. Based on our verification and according to the information and explanations given bythe management the company has not defaulted in repayment of loans or borrowings to afinancial institution bank government or dues to debenture holders.
9. The company did not raise any money by way of initial public offer or further publicoffer (including debt instruments) during the year. Accordingly para 3(ix) of the orderis not applicable.
10. According to the information and explanations given to us no material fraud by thecompany or on the company by its officers or employees has been noticed or reported duringthe course of our audit.
11. According to the information and explanations given to us and based on ourexamination of the records of the company the company has paid / provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule v of the Act.
12. In our opinion and according to information and explanations given to us thecompany is not a nidhi company. Accordingly para 3(xii) of the order is not applicable.
13. According to the information and explanations given to us and based on ourexamination of records of the company transactions with related parties are in compliancewith section 177 and 188 of the Act wherever applicable and details of such transactionshave been disclosed in the financial statements as required by applicable accountingstandards.
14. According to the information and explanations given to us and based on ourexamination of records of the company the company has not made any preferential allotmentor private placement of shares or fully or partly convertible debentures during the year.Accordingly the provision of clause 3(xiv) of the order are not applicable to thecompany.
15. According to the information and explanations given to us and based on ourexamination of records of the company the company has not entered into non-cashtransactions with directors or persons connected with him. Accordingly para 3(xv) is notapplicable.
16. The company being an NBFC is required to be registered under section 45-IA of theReserve Bank of India Act 1934. The company is duly registered as a non-banking financialcompany ("NBFC") with the Reserve Bank of India ("RBI") and has gotclassified as a non-banking financial company with effect from February 18 1998.
Annexure "B" to the independent auditors' report
Report on the internal financial controls under clause (i) of sub-section 3 of section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KIFSFinancial Services Limited ("the company") as of March 31 2021 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
The company's management is responsible for establishing and maintaining internalfinancial controls based on the guidance note on audit of internal financial controls overfinancial reporting issued by the Institute of Chartered Accountants of India (ICAI).These responsibilities include the design implementation and maintenance of adequateinternal financial controls that were operating effectively for ensuring the orderly andefficient conduct of its business including adherence to company's policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the guidance note on audit of internal financial controls over financial reporting(the "Guidance note") and the standards on auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial control both applicable to an audit ofinternal financial control and both issued by the Institute of Chartered Accountants ofIndia. Those standards and the guidance note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting 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 understating 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 judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud of error.
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 over financial reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that:
i. pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
ii. provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and
iii. 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 financial statement.
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 misstatement due to error or fraud may occur and not be detected. Alsoprojections of any evaluation of internal financial controls over financial reporting tofuture periods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
In our opinion the company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2021 based on;
i. existing policies and procedures adopted by the company for ensuring orderly andefficient conduct of business;
ii. continuous adherence to company's policies;
iii. existing procedures in relation to safeguarding of company's fixed assetsinvestments inventories receivables loans and advances made and cash and bank balances;
iv. existing system to prevent and detect fraud and errors; v. accuracy andcompleteness of company's accounting records; and vi. existing capacity to prepare timelyand reliable financial information.