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Muthoot Capital Services Ltd.

BSE: 511766 Sector: Financials
NSE: MUTHOOTCAP ISIN Code: INE296G01013
BSE 00:00 | 03 Apr 244.95 -2.00
(-0.81%)
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241.00

HIGH

254.20

LOW

234.00

NSE 00:00 | 03 Apr 241.75
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OPEN

257.00

HIGH

257.00

LOW

228.60

OPEN 241.00
PREVIOUS CLOSE 246.95
VOLUME 1388
52-Week high 939.60
52-Week low 234.00
P/E 6.20
Mkt Cap.(Rs cr) 403
Buy Price 228.50
Buy Qty 5.00
Sell Price 252.00
Sell Qty 50.00
OPEN 241.00
CLOSE 246.95
VOLUME 1388
52-Week high 939.60
52-Week low 234.00
P/E 6.20
Mkt Cap.(Rs cr) 403
Buy Price 228.50
Buy Qty 5.00
Sell Price 252.00
Sell Qty 50.00

Muthoot Capital Services Ltd. (MUTHOOTCAP) - Auditors Report

Company auditors report

INDEPENDENT AUDITOR’S REPORT

To

The Members of Muthoot Capital Services Limited Report on the Audit of the StandaloneFinancial Statements

Opinion

We have audited the standalone financial statements of Muthoot Capital Services Limited("the Company") which comprise the Balance Sheet as at 31st March 2019 theStatement of Profit and Loss and Statement of Cash Flows for the year ended on that dateand the notes to the financial statements including a summary of significant accountingpolicies 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 accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2019 its Profit and Cash Flows forthe 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 Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor’s Responsibilities for the Audit ofthe Financial Statements section of our report. We are independent of the Company inaccordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Act and the Rules thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for 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.

Key Audit Matters How addressed in Audit
Accuracy in identification and categorisation of receivables from financing activities as performing and non-performing assets including those under securitisation arrangements and in ensuring appropriate asset classification existence of security income recognition provisioning/ write off thereof and completeness of disclosure including compliance in accordance with the applicable extant guidelines issued by Reserve Bank of India (RBI). We have assessed the systems and processes laid down by the company to appropriately identify and classify the receivables from financing activities including those in place to ensure correct classification income recognition and provisioning/write off including of Non-performing assets as per applicable RBI guidelines. The audit approach included testing the existence and effectiveness of the control environment laid down by the management and conducting of detailed substantive verification on selected samples of continuing and new transactions in accordance with the principles laid down in the Standards on Auditing and other guidance issued by Institute of Chartered Accountants of India. Agreements entered into regarding significant transactions including related to corporate loans and securitization/assignment arrangements have been examined to ensure compliance. We have also reviewed the reports generated from management information systems audit/inspection reports issued by the concurrent / internal/secretarial auditors and Reserve Bank of India. The impact of all significant external and internal events including those if any subsequent to balance sheet date have been taken into consideration for the above purposes. Compliance with material disclosure requirements prescribed by RBI guidelines and other statutory requirements have been verified.
Completeness in identification accounting and disclosure of related party transactions in accordance with the applicable laws and financial reporting framework. We have assessed the systems and processes laid down by the company to appropriately identify account and disclose all material related party transactions in accordance with applicable laws and financial reporting framework. We have designed and performed audit procedures in accordance with the guidelines laid down by ICAI in the Standard on Auditing (SA 550) to identify assess and respond to the risks of material misstatement arising from the entity’s failure to appropriately account for or disclose material related party transactions which includes obtaining necessary approvals at appropriate stages of such transactions as mandated by applicable laws and regulations. We have also reviewed the Secretarial Audit report during the course of evaluating the internal control systems in ensuring compliance with applicable laws rules regulations and guidelines.

Information Other than the Standalone Financial Statements and Auditor’s Reportthereon (Other Information)

The Company’s Board of Directors is responsible for the other information. Theother information comprises the information included in the Corporate OverviewBoard’s Report Management Discussion and Analysis Report and Report on CorporateGovernance in the Annual Report of the Company for the financial year 2018-19 but doesnot include the financial 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.

Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial 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 and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the accounting Standards specified under section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of 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 financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.

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 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 ahigh level of assurance but is not a guarantee that an audit conducted in accordance withSAs will always detect a material misstatement when it exists. Misstatements can arisefrom fraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these financial statements. As part of an audit in accordance with SAs weexercise professional judgment and maintain professional skepticism throughout the audit.We also:

• Identify and assess the risks of material misstatement of the financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.

• Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 concernbasis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany’s ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor’s report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor’s report. However future events or conditions may cause theCompany to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.

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 financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified 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 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 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.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Companies Act 2013 we give in "Annexure A" a statement onthe matters specified 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 and the Statement of CashFlows dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules2014.

(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controls over financialstatement reporting of the Company and the operating effectiveness of such controls referto our separate Report in "Annexure B".

(g) With respect to the other matters to be included in the Auditor’s Report inaccordance with Section 197(16) of the Act in our opinion and to the best of ourinformation and according to the explanations given to us: the remuneration paid by theCompany to its directors during the year is in accordance with the provisions of section197 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 its financial statements - Refer Note 7 to the financial statements

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.

For Varma & Varma
Chartered Accountants
FRN No: 004532S
Sd/-
Place : Kochi -19 VIJAY NARAYAN GOVIND
Date : 24th April 2019 Partner
M.No. 203094

ANNEXURE A REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORT ON OTHER LEGALANDREGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ON THEFINANCIAL STATEMENTS OF MUTHOOT CAPITAL SERVICES LIMITED FOR THE YEAR ENDED MARCH 312019:

1. (a) The Company is maintaining proper records showing full particulars includingquantitative

details and situation of fixed assets.

(b) We are informed that the company has a programme for physical verification of fixedassets at reasonable intervals and that no material discrepancies were noticed on suchverification.

(c) The Company does not have any immovable property and hence the reportingrequirements as per clause 3 (1) (c) of the Order are not applicable.

2. Except for the repossessed assets from borrowers stock of stationery and salespromotion items the Company does not have any other stock of inventory. These Inventorieshave been physically verified during the year by the management. In our opinion thefrequency of verification is reasonable. In our opinion and according to the informationand explanations given to us material discrepancies were not noticed on such physicalverification.

3. According to the information and explanation given to us the Company has grantedsecured loan to one company unsecured intercorporate deposit to one company and unsecuredloan to one partnership firm covered in the Register maintained under section 189 of theAct in respect of which;

(a) The terms and conditions of the grant of such loans are in our opinion primafacie not 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.

4. According to the information and explanations given to us and the records of thecompany examined by us the Company has complied with the provisions of Sections 185 and186 of the Act in respect of grant of loans making investments and providing guaranteesand securities as applicable.

5. In respect of deposits accepted in our opinion and according to the information andexplanations given to us directives issued by the Reserve Bank of India and theprovisions of sections 73 to 76 or any other relevant provisions of the Act and the rulesframed there under to the extent applicable have been complied with. According to theinformation and explanations given to us by the management no order has been passed byCompany Law Board or National Company Law Tribunal or Reserve Bank of India or any courtor any other Tribunal in respect of the aforesaid deposits.

As stated in Note 11.2 of the financial statements there are unpaid amounts againstmatured public deposits amounting to Rs. 28916 thousand (including interest) outstandingas on 31st March 2019 and the management has confirmed that they could not pay the samesince claims were not received from public deposit holders.

6. The maintenance of cost audit records has not been specified by the CentralGovernment under section 148(1) of the Companies Act 2013 for the business activitiescarried out by the company. Thus reporting under clause 3(vi) of the order is notapplicable to the company.

7. (a) As per the information and explanations furnished to us and according to ourexamination

of the records of the Company except for three instances of delay in deduction andremittance of Tax deducted at source the Company has been generally regular in depositingundisputed statutory dues including Provident Fund Employee’s State InsuranceIncome Tax Goods and Service Tax Cess and any other statutory dues as applicable to theCompany. According to the information and explanation given to us by the management thereare no arrears of undisputed statutory dues outstanding as at the last date of thefinancial year for a period of more than six months from the date on which they becamepayable.

(b) According to the information and explanations given to us there were nooutstanding dues of sales tax income tax wealth tax customs duty excise duty servicetax Goods and Service Tax and cess that have not been deposited on account of anydispute.

8. In our opinion and according to the information and explanations given to us and therecords of the Company examined by us the Company has not defaulted in repayment of loansor borrowings to financial institutions banks Governments or dues to debenture holders.

As stated in Note No.11.1 of the financial statements there are unpaid amounts againstmatured debentures amounting to Rs. 621 thousand (including interest) outstanding as onMarch 31 2019 and the management has confirmed that they could not pay the same sinceclaims were not received from the debenture holders.

9. According to the information and explanations given to us and the records of theCompany examined by us no moneys were raised by way of initial public offer or furtherpublic offer (including debt instruments) and the term loans availed by the company havebeen applied for the purpose for which the loans were obtained.

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 year.

11. According to the information and explanations given to us and the records of theCompany examined by us managerial remuneration has been paid or provided in accordancewith the requisite approvals mandated by the provisions of section 197 read with ScheduleV to the Act.

12. The Company is not a Nidhi Company. Accordingly the reporting requirement underclause (xii) of paragraph 3 of the Order is not applicable to the Company.

13. The Company has complied with the provisions of Section 177 and 188 of the Actwhere applicable for all transactions with the related parties. The details of relatedparty transactions have been disclosed in Note No 4 of the financial statements asrequired by the applicable accounting standards.

14. The company has not made any preferential allotment of shares or fully or partlyconvertible debentures during the year under review and thus the requirement under section42 of the Act is not applicable.

15. According to the information and explanations given to us and based on ourexamination of the records of the company the company has not entered into any non-cashtransactions with Directors or persons connected with the Directors and hence thereporting requirement under clause (xv) of paragraph 3 of the Order is not applicable.

16. The Company is engaged in the business of Non-Banking Financial Institution and ithas obtained the certificate of registration as provided in section 45-IA of the ReserveBank of India Act 1934.

For Varma & Varma
Chartered Accountants
FRN No: 004532S
Sd/-
Place : Kochi -19 VIJAY NARAYAN GOVIND
Date : 24th April 2019 Partner
M.No. 203094

ANNEXURE B REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING "REPORT ON OTHER LEGALAND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITOR’S REPORT OF EVEN DATE ONTHE FINANCIAL STATEMENTS OF MUTHOOT CAPITAL SERVICES LIMITED FOR THE YEAR ENDED 31st MARCH2019.

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 control systems with reference to financialstatements reporting of Muthoot Capital Services Limited ("the Company")as of March 31 2019 in conjunction with our audit of the financial statements of theCompany for the year ended on that date.

Management’s Responsibility for Internal Financial Controls

The Company’s management is responsible for establishing and maintaining internalfinancial controls based on the internal controls with reference to financial statementsreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India. Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to company’s policies the safeguardingof its assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Companies Act 2013.

Auditor’s Responsibility

Our responsibility is to express an opinion on the Company’s internal financialcontrols systems with reference to financial statements reporting based on our audit. Weconducted our audit in accordance with the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting (the "Guidance Note") and the Standards onAuditing issued by ICAI and deemed to be prescribed under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls system withreference to financial statements reporting was established and maintained and if suchcontrols operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements reportingand their operating effectiveness. Our audit of internal financial controls system withreference to financial statements reporting included obtaining an understanding ofinternal financial controls system with reference to financial statements 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 controlssystem with reference to financial statements reporting.

Meaning of Internal Financial Controls with reference to Financial Statements reporting

A company’s internal financial controls system with reference to financialstatements reporting is a process designed to provide reasonable assurance regarding thereliability of financial reporting and the preparation of financial statements forexternal purposes in accordance with generally accepted accounting principles. Acompany’s internal financial controls system with reference to financial statementsreporting 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 with reference to FinancialStatements reporting

Because of the inherent limitations of internal financial controls system withreference to financial statements reporting including the possibility of collusion orimproper management override of controls material misstatements due to error or fraud mayoccur and not be detected. Also projections of any evaluation of the internal financialcontrols system with reference to financial statements reporting to future periods aresubject to the risk that the internal financial controls system with reference tofinancial statements reporting may become inadequate because of changes in conditions orthat the 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 with reference to financial statements reporting and such internal financialcontrols system with reference to financial statements reporting were operatingeffectively as at March 31 2019 based on the internal control with reference tofinancial statements reporting criteria established by the Company considering theessential components of internal control stated in the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting issued by the Institute of CharteredAccountants of India.

For Varma & Varma
Chartered Accountants
FRN No: 004532S
Sd/-
Place : Kochi - 19 VIJAY NARAYAN GOVIND
Date : 24th April 2019 Partner
M.No. 203094