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Manappuram Finance Ltd.

BSE: 531213 Sector: Financials
NSE: MANAPPURAM ISIN Code: INE522D01027
BSE 13:11 | 21 Jan 180.75 0.50
(0.28%)
OPEN

179.20

HIGH

181.60

LOW

178.35

NSE 12:59 | 21 Jan 180.45 0.25
(0.14%)
OPEN

179.30

HIGH

181.65

LOW

178.20

OPEN 179.20
PREVIOUS CLOSE 180.25
VOLUME 51457
52-Week high 184.85
52-Week low 90.00
P/E 15.56
Mkt Cap.(Rs cr) 15,273
Buy Price 180.65
Buy Qty 6.00
Sell Price 180.80
Sell Qty 923.00
OPEN 179.20
CLOSE 180.25
VOLUME 51457
52-Week high 184.85
52-Week low 90.00
P/E 15.56
Mkt Cap.(Rs cr) 15,273
Buy Price 180.65
Buy Qty 6.00
Sell Price 180.80
Sell Qty 923.00

Manappuram Finance Ltd. (MANAPPURAM) - Auditors Report

Company auditors report

To The Members of MANAPPURAM FINANCE LIMITED

REPORT ON THE AUDIT OF THE STANDALONE FINANCIAL STATEMENTS

OPINION

We have audited the accompanying standalone financial statements of MANAPPURAMFINANCE LIMITED ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Cash Flow Statement and the Statement of Changes in Equity for the year then endedand a summary of the significant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaas referred to in Note 2 of notes to standalone financial statements of the state ofaffairs of the Company as at March 31 2019 and its profit total comprehensive incomeits cash flows and the changes in equity 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'sResponsibility for the Audit of the Standalone 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 ethical requirementsthat are relevant to our audit of the standalone financial statements under the provisionsof the Act and the Rules made thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence obtained by us is sufficient and appropriate to provide abasis 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 matters described below to bethe key audit matters to be communicated in our report.

Key Audit Matter Auditor's Response
1 Whether Gold loan interest income is correctly calculated as per the gold loan schemes Principle Audit Procedures:
This is considered as Key Audit Matter as this is the most significant item in the statement of profit and loss and varies with different types of schemes. We assessed the Company's process on interest income computation.
Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows:
Since the entire interest computation is system driven we tested
• Evaluated the design of internal controls relating to interest income computation.
• Selected a sample of continuing and new gold loan schemes and tested the operating effectiveness of the internal control relating to interest income computation. We carried out a combination of procedures involving enquiry and observation reperformance and inspection of evidence in respect of operation of these controls.
• Tested the relevant information technology systems' access and change management controls relating to interest income computation and related information used in interest computation.
• Obtained the list of modifications made in the interest scheme master during the year and test checked the same on sample basis.
• Performed analytical procedures for testing the accuracy of the revenue recorded.

INFORMATION OTHER THAN THE FINANCIAL STATEMENTS AND AUDITOR'S REPORT THEREON

• The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Management Discussion andAnalysis Board's

Report Business Responsibility Report Corporate Governance and Shareholder'sInformation but does not include consolidated financial statements standalone financialstatements and our auditor's report thereon.

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

• In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially 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 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 includingother comprehensive income cash flows and changes in equity of the Company in accordancewith the 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 is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those Board of Directors are also responsible for overseeing the Company's financialreporting process.

AUDITOR'S RESPONSIBILITY 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 in accordance with SAs we exercise professional judgment andmaintain professional skepticism 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 control 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 the 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 financial statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the standalone financial statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i) planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the standalone 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 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 standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or 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.

The comparative financial information of the Company for the year ended March 31 2018and the related transition date opening balance sheet as at April 1 2017 included inthese standalone financial statements have been prepared after adjusting previouslyissued the standalone financial statements prepared in accordance with the Companies(Accounting Standards) Rules 2006 to comply with Ind AS. The previously issued standalonefinancial statements were audited by the predecessor auditor whose report for the yearended March 31 2017 dated May 25 2017 expressed an unmodified opinion on thosestandalone financial statements. Adjustments made to the previously issued standalonefinancial statements to comply with Ind AS have been audited by us.

Our opinion on the standalone financial statements is not modified in respect of thisthe above matters on the comparative financial information.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. As required by Section 143(3) of the Act based on our audit 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 the Cash Flow Statement and Statement of Changes in Equity dealt with by thisReport are in agreement with the books of account. d) In our opinion the aforesaidstandalone financial statements comply with the Ind AS specified under Section 133 of theAct and other accounting principles generally accepted in India (Refer Note 2 of theStandalone Financial Statements).

e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2019 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 A". 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.

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 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in 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.

2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No.117366W/W-100018)
S. Sundaresan
Partner
Bengaluru 15 May 2019 (Membership No. 25776)

Annexure "A" to the Independent Auditor's Report

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' section 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 ("THE ACT")

We have audited the internal financial controls over financial reporting of MANAPPURAMFINANCE LIMITED ("the Company") as of March 31 2019 in conjunction with ouraudit of the standalone Ind AS 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 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 Controls Over Financial Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India (the"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 tocompany'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.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note issued by the ICAI and the Standards onAuditing prescribed under Section 143(10) of the Act to the extent applicable to an auditof internal financial controls. Those Standards and the Guidance Note require that wecomply 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.

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 risks 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 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 (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 andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised 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 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

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 criteria forinternal financial control over financial reporting established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No.117366W/W-100018)
S. Sundaresan
Partner
Bengaluru 15 May 2019 (Membership No. 25776)

Annexure "B" to the Independent Auditor's Report

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) Some of the fixed assets were physically verified during the year by the Managementin accordance with a programme of verification which in our opinion provides for physicalverification of all the fixed assets at reasonable intervals. According to the informationand explanations given to us no material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us the records examined byus and based on the examination of the registered sale deed provided to us we reportthat the title deeds comprising all the immovable properties of land and buildings whichare freehold are held in the name of the Company as at the balance sheet date. Accordingto the information and explanations given to us and based on the examination of the leaseagreement we report that in respect of building constructed on leased land the leaseagreement are in the name of the Company where the Company is the lessee in theagreement.

(ii) The Company does not have any inventory and hence reporting under clause (ii) ofthe Order is not applicable.

(iii) According to the information and explanations given to us the Company hasgranted secured loan to a wholly owned subsidiary company covered in the registermaintained under section 189 of the Companies Act 2013 in respect of which:

(a) The terms and conditions of the grant of such loan in our opinion prima facienot prejudicial to the Company's interest.

(b) The schedule of repayment of principal and payment of interest has been stipulatedand repayments or receipts of principal amounts and interest have been regular as perstipulations.

(c) There is no overdue amount remaining outstanding as at the balance sheet date.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of Act in respect ofgrant of loans making investments as applicable. The Company has not provided anyguarantee under Section 186.

(v) According to the information and explanations given to us the Company has notaccepted any deposit to which directives issued by the Reserve Bank of India and theprovisions of Sections 73 to 76 or any other relevant provisions of the Companies Act2013 and Rules framed thereunder were applicable.

(vi) The maintenance of cost records has not been specified by the Central Governmentunder section 148(1) of the Companies Act 2013 in respect of the business / activities ofthe Company.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income-tax Goods and Services Taxcess and other material statutory dues applicable to it to the appropriate authorities.

(b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income-tax Goods and Service Tax cess and other material statutory duesin arrears as at March 31 2019 for a period of more than six months from the date theybecame payable.

(c) Details of dues of Income-tax Service Tax and Value Added Tax dues which have notbeen deposited as on March 31 2019 on account of disputes are given below:

Name of Statute Nature of Dues Forum where Dispute is Pending Period to which the Amount Relates Amount involved Amount unpaid
` ( in million) ` ( in million)
Income Tax Act 1961 Income Tax Commissioner of Income Tax (Appeals) Assessment years 2012-13 to 2015-16 1285.36 674.76
Finance Act 1994 Service Tax (Excluding Penalty and interest if any) Customs Excise and Service Tax Appellate Tribunal (CESTAT) Financial Year 2006-07 and 2008-09 0.94 0.94
Kerala Value Added Tax Act 2003 Value added Tax (Excluding Penalty and interest if any) Deputy Commissioner (Appeals) Financial Year 2009- 10 2010-11 2011-12 2012-13 and 2014-15 49.94 49.94

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to financialinstitutions banks and dues to debenture holders.

(ix) In our opinion and according to the information and explanations given to usmoney raised by way of further public offer (including debt instruments) and the termloans have been applied by the Company during the year for the purposes for which theywere raised other than temporary deployment pending application of proceeds.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no material fraud on the company by its officersor employees has been noticed or reported during the year other than those disclosed inNote 61 to the financial statements.

(xi) In our opinion and according to the information and explanations given to us theCompany has paid / provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order is not applicable to the Company.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or directors of its subsidiary company or persons connected with them and henceprovisions of section 192 of the Companies Act 2013 are not applicable.

(xvi) The Company is required to be registered under section 45-IA of the Reserve Bankof India Act 1934 and it has obtained the registration.

For DELOITTE HASKINS & SELLS LLP
Chartered Accountants
(Firm's Registration No.117366W/W-100018)
S. Sundaresan
Partner
Bengaluru 15 May 2019 (Membership No. 25776)