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Lakshmi Vilas Bank Ltd.

BSE: 534690 Sector: Financials
NSE: LAKSHVILAS ISIN Code: INE694C01018
BSE 00:00 | 18 Oct 19.00 -0.95
(-4.76%)
OPEN

19.00

HIGH

20.00

LOW

19.00

NSE 00:00 | 18 Oct 19.00 -0.95
(-4.76%)
OPEN

19.00

HIGH

20.40

LOW

19.00

OPEN 19.00
PREVIOUS CLOSE 19.95
VOLUME 1269413
52-Week high 97.35
52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 640
Buy Price 19.00
Buy Qty 4000.00
Sell Price 19.00
Sell Qty 327433.00
OPEN 19.00
CLOSE 19.95
VOLUME 1269413
52-Week high 97.35
52-Week low 19.00
P/E
Mkt Cap.(Rs cr) 640
Buy Price 19.00
Buy Qty 4000.00
Sell Price 19.00
Sell Qty 327433.00

Lakshmi Vilas Bank Ltd. (LAKSHVILAS) - Auditors Report

Company auditors report

To

The Members of The Lakshmi Vilas Bank Limited

Report on the Financial Statements

1. We have audited the accompanying financial statements of The Lakshmi Bank Limited('the Bank') which comprise the Balance Sheet as at 31 March 2018 the Profit and LossAccount the Cash Flow Statement for the year then ended and a summary of significantaccounting policies and other explanatory information. Incorporated in these financialstatements are the returns for the year ended on that date of 21 branches/offices auditedby us and 545 branches/offices audited by statutory branch auditors.

Management's Responsibility for the Financial Statements

2. The Bank's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ('the Act') with respect to the preparation of thesefinancial statements that give a true and fair view of the financial position financialperformance and cash flows of the Bank in accordance with the accounting principlesgenerally accepted in India including the Accounting Standards specified under Section133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and provisions ofSection 29 of the Banking Regulation Act 1949 and circulars and guidelines issued by theReserve Bank of India ('RBI') from time to time.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Bank andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material mis-statementwhether due to fraud or error.

Auditor's Responsibility

3. Our responsibility is to express an opinion on these financial statements based onour audit.

4. In conducting our audit we have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder.

5. We conducted our audit of the financial statements in accordance with Standards onAuditing ('the Standards') specified under section 143(10) of the Companies Act. ThoseStandards require that we comply with ethical requirements and plan and perform the auditto obtain reasonable assurance about whether the financial statements are free of materialmis-statements.

6. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the financial statements. The procedures selected depend on theauditor's judgment including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Bank's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of accounting policies used and the reasonableness of the accountingestimates made by the Bank's Directors as well as evaluating the overall presentation ofthe financial statements.

7. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion.

Basis for Qualified Opinion

8. The financial statements of the bank include Advances (net of provisions) of $25768 Crore after adjustment of third party deposits amounting to $ 794 Crore dulysupported by legal opinions. The said adjustment is being questioned by the depositholder. Pending resolution of the same we are unable to comment on the impact if any onthe financial statements and legal/ regulatory consequences.

9. The series of transactions leading to the above adjustment has resulted in shortfallin CRR maintenance. Penal consequences if any thereon is not ascertainable.

Qualified Opinion

10. In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the 'Basis forQualified Opinion' paragraph the financial statements give the information required bythe Banking Regulation Act 1949 as well as the Companies Act 2013 in the manner sorequired for banking companies and give a true and fair view in conformity with accountingprinciples generally accepted in India of the state of affairs of the Bank as at 31stMarch 2018 and its loss and its cash flows for the year then ended.

Emphasis of Matter

11. We draw attention to

(i) Note No. 3.3.6 of the financial statements regarding deferment of provision forMark to Market (MTM) losses on Investments of $ 98.29 Crore; and (ii) Note No. 4.4.2 ofthe financial statements regarding deferment of Gratuity provision of $ 11.27 Crore; Ouropinion is not qualified in respect of these matters.

Report on Other Legal and Regulatory Requirements

12. The Balance Sheet and the Profit and Loss Account have been drawn up in accordancewith the provisions of Section 29 of the Banking Regulation Act 1949 and Section 133 ofthe Companies Act 2013 read with Rule 7 of the Companies (Accounts) Rules 2014.

13. As required by sub section (3) of Section 30 of the Banking Regulation Act 1949we report that:

(a) we have obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purpose of our audit except for the matterdescribed in the 'Basis for Qualified Opinion' paragraph and have found them to besatisfactory;

(b) the transactions of the Bank which have come to our notice have been within thepowers of the Bank;

(c) the returns received from the offices and branches of the Bank have been foundadequate for the purposes of our audit.

14. Further as required by Section 143(3) of the Act we report that:

(i) we have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purpose of our audit except for thematter described in the 'Basis for Qualified Opinion' paragraph;

(ii) in our opinion proper books of account as required by law have been kept by theBank so far as it appears from our examination of those books and proper returns adequatefor the purposes of our audit have been received from branches not visited by us;

(iii) the reports on the accounts of the branches audited by branch auditors of theBank under Section 143(8) of the Companies Act 2013 have been sent to us and have beenproperly dealt with by us in preparing this report;

(iv) The Balance Sheet the Profit and Loss Account and the Cash Flow Statement dealtwith by this report are in agreement with the books of account and with the returnsreceived from the branches not visited by us;

(v) Except for the possible effects of matter described in the 'Basis for QualifiedOpinion' paragraph in our opinion the financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014 to the extent they are not inconsistent with the accountingpolicies prescribed by RBI;

(vi) on the basis of written representations received from the directors as on 31stMarch 2018 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2018 from being appointed as a director in termsof Section 164 (2) of the Act;

(vii) with respect to the adequacy of the internal financial controls over financialreporting of the Bank and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A"; and

(viii) 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:

a. the Bank has disclosed the impact of pending litigations on its financial positionin its financial statements - Refer Schedule 18 - Note No. 7 to the financial statements;

b. the Bank does not have any long term contracts including derivative contracts -Refer Schedule 18 - Note No. 3.3 to the financial statements; and c. there has been nodelay in transferring amounts required to be transferred to the Investor Education andProtection Fund by the Bank.

For M/s. R. K. KUMAR & CO.
Chartered Accountants
FRN - 001595S
(G. NAGANATHAN)
Place : Chennai Partner
Date : 25th May 2018 M.No. 022456

Annexure A to the independent auditors' report of even date on the financial statementsof The Lakshmi Vilas Bank Limited

Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013

1. We have audited the internal financial controls over financial reporting of TheLakshmi Vilas Bank Limited ('the Bank') as at 31st March 2018 in conjunctionwith our audit of the financial statements of the Bank for the year ended on that date.

Management's Responsibility for Internal Financial Controls over Financial Reporting

2. The Bank's Board of Directors is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingcriteria established by the Bank considering the essential components of internal controlstated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting ('the Guidance Note') issued by the Institute of Chartered Accountants of India('the 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 Bank'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 under the Companies Act 2013 ('the Act').

Auditor's Responsibility

3. Our responsibility is to express an opinion on the Bank'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 ICAI and the Standards on Auditing ('the Standards')prescribed under Section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated effectively in all materialrespects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material mis-statement of the financial statements whether due to fraud orerror.

5. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Bank's internal financial controls withreference to financial Statements.

Meaning of Internal Financial Controls Over Financial Reporting

6. A bank'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 bank's internal financial control over financialreporting includes those policies and procedures that:

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the bank;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditure of the bank are being made only inaccordance with authorizations of management and directors of the bank; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the bank's assets that could have amaterial effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

7. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material mis-statements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls 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

8. In our opinion the Bank has in all material respects adequate internal financialcontrols with reference to financial statements and such internal financial controls withreference to financial statements were operating effectively as at 31st March2018 based on the internal controls criteria established by the Bank considering theessential components of internal control stated in the Guidance Note issued by the ICAI.

For M/s. R. K. KUMAR & CO.
Chartered Accountants
FRN - 001595S
(G. NAGANATHAN)
Place : Chennai Partner
Date : 25th May 2018 M.No. 022456