You are here » Home » Companies » Company Overview » Motilal Oswal Financial Services Ltd

Motilal Oswal Financial Services Ltd.

BSE: 532892 Sector: Financials
NSE: MOTILALOFS ISIN Code: INE338I01027
BSE 11:22 | 22 Feb 622.00 2.25
(0.36%)
OPEN

607.35

HIGH

625.00

LOW

607.05

NSE 11:19 | 22 Feb 619.85 2.15
(0.35%)
OPEN

611.00

HIGH

625.00

LOW

611.00

OPEN 607.35
PREVIOUS CLOSE 619.75
VOLUME 1461
52-Week high 1212.65
52-Week low 549.75
P/E 36.98
Mkt Cap.(Rs cr) 9,056
Buy Price 621.00
Buy Qty 1.00
Sell Price 622.45
Sell Qty 10.00
OPEN 607.35
CLOSE 619.75
VOLUME 1461
52-Week high 1212.65
52-Week low 549.75
P/E 36.98
Mkt Cap.(Rs cr) 9,056
Buy Price 621.00
Buy Qty 1.00
Sell Price 622.45
Sell Qty 10.00

Motilal Oswal Financial Services Ltd. (MOTILALOFS) - Auditors Report

Company auditors report

To

The Members of

Motilal Oswal Financial Services Limited

Report on the Standalone Financial Statements

1. This Report is issued in supersession of our earlier report dated 21 May 2018.

2. We have audited the accompanying standalone financial statements of Motilal OswalFinancial Services Limited ('the Company') which comprise the Balance Sheet as at 31March 2018 the Statement of Profit and Loss and the Cash Flow Statement for the year thenended and a summary of the significant accounting policies and other explanatoryinformation refer paragraph 10 below.

Management's Responsibility for the Standalone Financial Statements

3. The Company'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 thesestandalone financial statements that give a true and fair view of the financial positionfinancial performance and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Accounting Standards prescribedunder Section 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 (asamended). This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company 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 standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditor's Responsibility

4. Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

5. We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

6. We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.

7. An audit involves performing procedures to obtain audit evidence about the amountsand the disclosures in the standalone financial statements. The procedures selected dependon the auditor's judgment including the assessment of the risks of material misstatementof the standalone financial statements whether due to fraud or error. In making thoserisk assessments the auditor considers internal financial controls relevant to theCompany's preparation of the standalone financial statements that give a true and fairview in order to design audit procedures that are appropriate in the circumstances. Anaudit also includes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

8. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on these standalone financial statements.

Opinion

9. 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 Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at 31 March 2018 and its profit and its cash flows for the year ended on that date.

Emphasis of Matter

10. We draw attention to Note 2(o) of the accompanying standalone financial statementswhich describes that the standalone financial statements of the Company for the year ended31 March 2018 approved by the Board of Directors in its meeting held on 21 May 2018 havebeen revised prior to placing of these in the Annual General Meeting for consideration bythe shareholders so as to give effect to the scheme of amalgamation entered between theCompany Motilal Oswal Securities Limited (wholly owned subsidiary) and their respectiveshareholders ('the Scheme'). The Scheme was approved by the Honourable National CompanyLaw Tribunal Mumbai Bench ('NCLT') vide its order dated 30 July 2018 which was filed bythe Company with the Registrar of Companies on 21 August 2018 and has an appointed date of1 April 2017 which has been given effect to as decided

by the Board of Directors. These financial statements have now been approved by theBoard of Directors on 21 August 2018 and our report dated 21 May 2018 stands updated onlyto the extent of giving effect to the referred Scheme. Further our audit procedures onthe subsequent events for the period 21 May 2018 to 21 August 2018 are restricted solelyto such amendment of the accompanying standalone financial statements. Our opinion is notmodified in respect of this matter.

Other Matter

11. The standalone financial statements of the Company and the wholly owned subsidiaryfor the year ended 31 March 2017 were audited by predecessor auditor of the Company whosereport dated 27 April 2017 expressed an unmodified opinion on those statements. Our auditreport is not qualified in respect of this matter.

12. As required by the Companies (Auditor's Report) Order 2016 ('the Order') issued bythe Central Government of India in terms of Section 143(11) of the Act we give in theAnnexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.

13. Further to our comments in Annexure I as required by Section 143(3) of the Act wereport that:

a. 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;

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 standalone financial statements dealt with by this report are in agreement withthe books of account;

d. in our opinion the aforesaid standalone financial statements comply with theAccounting Standards prescribed under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 (as amended);

e. on the basis of the written representations received from the directors and taken onrecord by the Board of Directors none of the directors is disqualified as on 31 March2018 from being appointed as a director in terms of Section 164(2) of the Act;

f. we have also audited the internal financial controls over financial reporting(IFCoFR) of the Company as on 31 March 2018 in conjunction with our audit of thestandalone financial statements of the Company for the year ended on that date and ourreport dated 21 August 2018 as per Annexure II expressed unmodified opinion; and

g. 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 as detailed in Note 30(d) to the standalone financial statements hasdisclosed the impact of pending litigations on its financial position;

ii. the Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

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

iv. the disclosure requirements relating to holdings as well as dealings in specifiedbank notes were applicable for the period from 8 November 2016 to 30 December 2016 whichare not relevant to these standalone financial statements. Hence reporting under thisclause is not applicable.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Sudhir N. Pillai

Partner

Membership No.: 105782

Place: Mumbai

Date : 21 August 2018.

ANNEXURE 1 TO THE INDEPENDENT AUDITOR'S REPORT

Annexure I to the Independent Auditor's Report of even date to the members of MotilalOswal Financial Services Limited on the standalone financial statements for the yearended 31 March 2018

Based on the audit procedures performed for the purpose of reporting a true and fairview on the standalone financial statements of the Company and taking into considerationthe information and explanations given to us and the books of account and other recordsexamined by us in the normal course of audit and to the best of our knowledge and beliefwe report that:

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.

(b) The property plant and equipment have been physically verified by the managementduring the year and no material discrepancies were noticed on such verification. In ouropinion the frequency of verification of the fixed assets is reasonable having regard tothe size of the Company and the nature of its assets.

(c) The title deeds of all the immovable properties (which are included under the head'Property plant and equipment') are held in the name of the Company.

(ii) The Company is a non-banking finance company primarily engaged in the business oflending and does not hold any inventories. Accordingly the provisions of clause 3(ii) ofthe Order are not applicable and;

The Transferor Company does not have any tangible inventory. Accordingly theprovisions of clause 3(ii) of the Order are not applicable.

(iii) The Company has granted unsecured loans to companies covered in the registermaintained under Section 189 of the Act; and with respect to the same:

(a) in our opinion the terms and conditions of grant of such loans are not primafacie prejudicial to the company's interest.

(b) the schedule of repayment of the principal has been stipulated wherein theprincipal amounts are repayable on demand and since the repayment of such loans has notbeen demanded in our opinion repayment of the principal is regular; and the schedule ofpayment of interest has been stipulated and the receipts of the interest are regular;

(c) there is no overdue amount in respect of loans granted to such companies.

(iv) In our opinion the Company has complied with the provisions of Sections 185 and186 of the Act in respect of loans investments guarantees and security.

(v) In our opinion the provisions of the section 73 to 76 of the Act are notapplicable to the Company being an NBFC and also the Company has not accepted any depositsfrom public within the meaning of sections 73 to 76 of the Act. Accordingly theprovisions of clause 3(v) of the Order are not applicable and;

The Transferor Company has not accepted any deposits within the meaning of Sections 73to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended).Accordingly the provisions of clause 3(v) of the Order are not applicable.

(vi) The Central Government has not specified maintenance of cost records under sub-section (1) of Section 148 of the Act in respect of Company's services. Accordingly theprovisions of clause 3(vi) of the Order are not applicable.

(vii) (a) Undisputed statutory dues including provident fund employees' stateinsurance income -tax sales-tax service tax duty of customs duty of excise valueadded tax goods and service tax cess and other material statutory dues as applicablehave generally been regularly deposited to the appropriate authorities though there hasbeen a slight delay in a few cases. Further no undisputed amounts payable in respectthereof were outstanding at the year end for a period of more than six months from thedate they became payable.

The Transferor Company's undisputed statutory dues including provident fund employees'state insurance income-tax sales-tax goods and service tax service tax duty ofcustoms duty of excise value added tax cess and other material statutory dues asapplicable have generally been regularly deposited to the appropriate authorities thoughthere has been a slight delay in a few cases. Undisputed amounts payable in respect ofstamp duty thereof which were outstanding at the year-end for a period of more than sixmonths from the date they became payable are as follows:

Statement of arrears of statutory dues outstanding for more than six months

Name of the Statute Nature of the dues Amount (Rs. In Lakhs) Period to which amount related Due date Date of Payment
Indian Stamp

Act 1899

Stamp Duty 104 Financial Year

2016-17

Not available as stamp duty is collected in not defined Not paid as on 18 May 2018
Indian Stamp

Act 1899

Stamp Duty 150 Financial Year 2017-18

(b) The dues outstanding in respect of income-tax sales-tax service tax goods andservice tax duty of customs duty of excise and value added tax on account of anydispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs. in lakhs) Amount paid under Protest (Rs. in lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income tax 17 7 Assessment year 2007-08 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 13 - Assessment year 2008-09 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 28 - Assessment year 2009-10 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 15 15 Assessment year 2009-10 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 65 65 Assessment year 2010-11 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 87 33 Assessment year 2011-12 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 26 - Assessment year 2012-13 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 95 5 Assessment year 2013-14 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 143 9 Assessment year 2014-15 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 774 92 Assessment year 2015-16 Commissioner of Income Tax (Appeals)

The Transferor Company's dues outstanding in respect of income-tax sales-tax goodsand service tax service tax duty of customs duty of excise and value added tax onaccount of any dispute are as follows:

Statement of Disputed Dues

Name of the statute Nature of dues Amount (Rs. in Lakhs) Amount paid under Protest (Rs. in Lakhs) Period to which the amount relates Forum where dispute is pending
Income Tax Act 1961 Income tax 48 370 Assessment Year 2007-08 High Court
Income Tax Act 1961 Income tax 152 200 Assessment Year 2008-09 High Court
Income Tax Act 1961 Income tax 24 102 Assessment Year 2009-10 High Court
Income Tax Act 1961 Income tax 15 - Assessment Year 2010-11 High Court
Income Tax Act 1961 Income tax 19 - Assessment Year 2011-12 High Court
Income Tax Act 1961 Income tax 88 20 Assessment Year 2012-13 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 39 - Assessment Year 2013-14 Income Tax Appellate Tribunal
Income Tax Act 1961 Income tax 1725 100 Assessment Year 2014-15 Commissioner of Income Tax (Appeals)
Income Tax Act 1961 Income tax 16 - Assessment Year 2015-16 Deputy Commissioner of Income Tax (Appeals)

(viii) The Company has not defaulted in repayment of loans or borrowings to anyfinancial institution or a bank or government or any dues to debenture-holders during theyear.

(ix) The Company did not raise moneys by way of initial public offer or further publicoffer (including debt instruments). In our opinion the term loans were applied for thepurposes for which the loans were obtained.

The Transferor Company did not raise moneys by way of initial public offer or furtherpublic offer (including debt instruments). In our opinion the term loans were applied forthe purposes for which the loans were obtained though surplus funds which were notrequired for immediate utilisation have been invested in liquid investments payable ondemand.

(x) No fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the period covered by our audit.

(xi) Managerial remuneration has been paid and provided by the Company in accordancewith the requisite approvals mandated by the provisions of Section 197 of the Act readwith Schedule Rs.to the Act.

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

(xiii) In our opinion all transactions with the related parties are in compliance withSections 177 and 188 of Act where applicable and the requisite details have beendisclosed in the financial statements as required by the applicable accounting standards.

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures.

(xv) In our opinion the company has not entered into any non-cash transactions withthe directors or persons connected with them covered under Section 192 of the Act.

(xvi) The Company is required to be registered under Section 45-IA of the Reserve Bankof India Act 1934 and such registration has been obtained by the company; and

(xvii) The Transferor Company is not required to be registered under Section 45-IA ofthe Reserve Bank of India Act 1934. Accordingly provisions of clause 3(xvi) of the Orderare not applicable.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Sudhir N. Pillai

Partner

Membership No.: 105782

Place: Mumbai

Date : 21 August 2018

ANNEXURE 2 TO THE INDEPENDENT AUDITOR'S REPORT

Annexure II to the Independent Auditor's Report of even date to the members of MotilalOswal Financial Services Limited on the standalone financial statements for the yearended 31 March 2018

Annexure II

Independent Auditor's Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ('the Act')

1. This Report is issued in supersession of our earlier report dated 21 May 2018.

2. In conjunction with our audit of the standalone financial statements of MotilalOswal Financial Services Limited ('the Company') as at and for the year ended 31 March2018 we have audited the internal financial controls over financial reporting ('IFCoFR')of the Company refer paragraph 9 below.

Management's Responsibility for Internal Financial Controls

3. The Company's Board of Directors is responsible for establishing and maintaininginternal financial controls based on criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls over Financial Reporting ('the Guidance Note') issued by the Instituteof Chartered Accountants of India ('ICAI').These responsibilities include the designimplementation and maintenance of adequate internal financial controls that were operatingeffectively for ensuring the orderly and efficient conduct of the Company's businessincluding adherence to the Company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditor's Responsibility

4. Our responsibility is to express an opinion on the Company's IFCoFR based on ouraudit. We conducted our audit in accordance with the Standards on Auditing issued by ICAIand deemed to be prescribed under Section 143(10) of the Act to the extent applicable toan audit of IFCoFR and the Guidance Note issued by the ICAI. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate IFCoFR were established andmaintained and if such controls operated effectively in all material respects.

5. Our audit involves performing procedures to obtain audit evidence about the adequacyof the IFCoFR and their operating effectiveness. Our audit of IFCoFR includes obtaining anunderstanding of IFCoFR assessing the risk that a material weakness exists and testingand evaluating the design and operating effectiveness of internal control based on theassessed risk. The procedures selected depend on the auditor's judgement including theassessment of the risks of material misstatement of the standalone financial statementswhether due to fraud or error.

6. We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's IFCoFR.

Meaning of Internal Financial Controls over Financial Reporting

7. A Company's IFCoFR is a process designed to provide reasonable assurance regardingthe reliability of financial reporting and the preparation of standalone financialstatements for external purposes in accordance with generally accepted accountingprinciples. A Company's IFCoFR include those policies and procedures that (1) pertain tothe maintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of standalonefinancial statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the Company are being made only in accordance withauthorisations of management and directors of the Company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the Company's assets that could have a material effect on the standalonefinancial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

8. Because of the inherent limitations of IFCoFR including the possibility ofcollusion or improper management override of controls material misstatements due to erroror fraud may occur and not be detected. Also projections of any evaluation of the IFCoFRto future periods are subject to the risk that the IFCoFR may become inadequate because ofchanges in conditions or that the degree of compliance with the policies or proceduresmay deteriorate.

Emphasis of Matter

9. We draw attention to Note 2(o) of the accompanying standalone financial statementswhich describes that the standalone financial statements of the Company for the year ended31 March 2018 approved by the Board of Directors in its meeting held on 21 May 2018 havebeen revised prior to placing of these in the Annual General Meeting for consideration bythe shareholders so as to give effect to the scheme of amalgamation entered between theCompany Motilal Oswal Securities Limited (wholly owned subsidiary) and their respectiveshareholders ('the Scheme'). The Scheme was approved by the Honourable National CompanyLaw Tribunal Mumbai Bench ('NCLT') vide its order dated 30 July 2018 which was filed bythe Company with the Registrar of Companies on 21 August 2018 and has an appointed date of1 April 2017 which has been given effect to as decided by the Board of Directors. Thesefinancial statements have now been approved by the Board of Directors on 21 August 2018and our report dated 21 May 2018 stands updated only to the extent of giving effect tothe referred Scheme. Further our audit procedures on the subsequent events for the period21 May 2018 to 21 August 2018 are restricted solely to such amendment of the accompanyingstandalone financial statements. Our opinion is not modified in respect of this matter.

Opinion

10. In our opinion the Company has in all material respects adequate internalfinancial controls over financial reporting and such controls were operating effectivelyas at 31 March 2018 based on criteria established by the Company considering theessential components of internal control stated in the Guidance Note issued by the ICAI.

For Walker Chandiok & Co LLP

Chartered Accountants

Firm's Registration No.: 001076N/N500013

Sudhir N. Pillai

Partner

Membership No.: 105782

Place: Mumbai

Date : 21 August 2018.