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Muthoot Finance Ltd.

BSE: 533398 Sector: Financials
NSE: MUTHOOTFIN ISIN Code: INE414G01012
BSE 13:03 | 09 Apr 742.55 54.45
(7.91%)
OPEN

708.00

HIGH

749.60

LOW

704.90

NSE 12:59 | 09 Apr 744.75 57.60
(8.38%)
OPEN

700.00

HIGH

749.95

LOW

700.00

OPEN 708.00
PREVIOUS CLOSE 688.10
VOLUME 52152
52-Week high 954.05
52-Week low 477.50
P/E 11.02
Mkt Cap.(Rs cr) 29,779
Buy Price 741.55
Buy Qty 25.00
Sell Price 742.15
Sell Qty 2.00
OPEN 708.00
CLOSE 688.10
VOLUME 52152
52-Week high 954.05
52-Week low 477.50
P/E 11.02
Mkt Cap.(Rs cr) 29,779
Buy Price 741.55
Buy Qty 25.00
Sell Price 742.15
Sell Qty 2.00

Muthoot Finance Ltd. (MUTHOOTFIN) - Auditors Report

Company auditors report

To the Members of Muthoot Finance Limited Kochi Report on theStandalone Financial Statements

We have audited the accompanying standalone financial statements ofMuthoot Finance Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2018 the Statement of Profit and Loss the Cash Flow Statement for the yearthen ended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone FinancialStatements

The Company's Board of Directors is responsible for the mattersstated in Section 134(5) of the Companies Act 2013 ("the Act") with respect tothe preparation of these standalone financial statements that give a true and fair view ofthe financial position financial performance and cash flows of the Company in accordancewith the accounting principles generally accepted in India including the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgements andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the standalone financial statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalonefinancial statements based on our audit.

We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Act. Those Standards require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether the standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence aboutthe amounts and the disclosures in the standalone financial statements. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the standalone financial statements whether due to fraud orerror. In making those risk assessments the auditor considers internal financial controlrelevant to the Company's preparation of the standalone financial statements thatgive a true and fair view in order to design audit procedures that are appropriate in thecircumstances. An audit also includes evaluating the appropriateness of the accountingpolicies used and the reasonableness of the accounting estimates made by theCompany's Directors as well as evaluating the overall presentation of the standalonefinancial statements.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone financialstatements.

Opinion

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at March 31 2018 and its profit and its cash flows for theyear ended on that date.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016("the Order") issued by the Central Government of India in terms of sub-section(11) of Section 143 of the Act we give in Annexure ‘A' a statement on thematters 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 explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit.

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books.

(c) The Balance Sheet the Statement of Profit and Loss and the CashFlow Statement dealt with by this Report are in agreement with the books of account.

(d) In our opinion the aforesaid standalone financial statementscomply with the Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014.

(e) On the basis of the written representations received from thedirectors as on March 31 2018 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2018 from being appointed as a director in termsof Section 164 (2) of the Act.

(f) With respect to the adequacy of the internal financial controlsystems with reference to financial statements reporting of the Company and the operatingeffectiveness of such controls refer to our separate Report in Annexure ‘B'.

(g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 in our opinion and to the best of our information and according to theexplanations given to us: i. The Company has disclosed the impact of pending litigationson its financial position in its standalone financial statements – Refer Note 29 tothe standalone financial statements.

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses.

iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company during theyear.

For Varma & Varma (FRN : 0045325)

Sd/-

V. Sathyanarayanan

Partner Chartered Accountants Membership No. 21941

Place: Kochi Date: May 16 2018

ANNEXURE ‘A' REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITREPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF MUTHOOT FINANCE LIMITED FORTHE YEAR ENDED MARCH 31 2018

1. (a) The Company is maintaining records showing full particularsincluding quantitative details and situation of fixed assets which however requires to beupdated.

(b) As informed to us not all the fixed assets have been physicallyverified by the management during the year but there is a regular programme ofverification which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. We are informed that no material discrepancies were noticedon such verification.

(c) According to the information and explanations given to us therecords of the Company examined by us and based on the details of land and buildingsfurnished to us by the Company the title deeds of immovable properties are held in thename of the Company. In respect of certain immovable property acquired under a scheme ofamalgamation the title deeds continue to remain in the name of the erstwhile owners.

2. The Company is a Non-Banking Finance Company and has not dealt withany goods and the Company does not hold any inventory during the period under audit.Accordingly the reporting requirement under clause (ii) of paragraph 3 of the Order isnot applicable.

3. According to the information and explanations given to us and therecords of the Company examined by us the Company has granted loans (both secured andunsecured) to two subsidiary companies during the year and the same is covered in theregister maintained under Section 189 of the Act.

The terms and conditions of the grant of such loans are not prejudicialto the Company's interest. The repayment or receipts of principal and interest are asper schedule stipulated and are regular. There are no overdue amounts.

4. According to the information and explanations given to us and therecords of the Company examined by us the Company has complied with the provisions ofSections 185 and 186 of the Act in respect of grant of loans and making of investments.The Company has not given any guarantees or provided security for which the provisions ofSections 185 and 186 of the Act are applicable.

5. The Company has not accepted any deposits from the public during theyear which attract the directives issued by the Reserve Bank of India. For the reasonsstated in Note 34 to the standalone financial statements loans accepted from a person(Balance outstanding at the end of the year: Nil) is not treated as a deposit. Being aNon-Banking Finance Company the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the rules framed thereunder regarding acceptance of deposits arenot applicable. Therefore the reporting requirement under clause (v) of paragraph 3 ofthe Order is not applicable.

6. To the best of our knowledge and according to the information andexplanations given to us the Central Government has not prescribed the maintenance ofcost records under Section 148 (1) of the Act for the Company at this stage.

7. (a) As per the information and explanations furnished to us andaccording to our examination of the records of the Company the Company has been generallyregular in depositing undisputed statutory dues including Provident Fund Employee'sState Insurance Income Tax Sales Tax Service Tax Goods and Service Tax Duty ofCustoms Duty of Excise Value Added Tax Cess and any other statutory dues as applicableto the Company to the appropriate authorities during the year.

According to the information and explanations given to us noundisputed statutory dues payable in respect of Provident Fund Employees State InsuranceIncome Tax Sales Tax Service Tax Goods and Service Tax Duty of Customs Duty ofExcise Value Added Tax Cess and other material statutory dues were outstanding as atMarch 31 2018 for a period of more than six months from the date they became payable.

(b) According to the information and explanations given to us and therecords of the Company examined by us there are no disputed amounts due to be depositedof sales tax Duty of Customs Duty of Excise or Value Added Tax as at March 31 2018.

According to the information and explanations given to us the followingdisputed amounts of income tax and service tax have not been deposited with theauthorities as at March 31 2018:

Nature of dues Statute

Amount `*

Period to which the amount relates

Forum where the dispute is pending
Service Tax (excluding Finance Act 1994

40047155.00

2003-2008

CESTAT Bangalore
interest)

21867738.00

2010-2013

CESTAT Bangalore

3004076497.00

2007-2008 to 2011-2012

CESTAT Bangalore

2314085.00

2007-2013

Commissioner (Appeals) Kochi

1080156.00

2008-2011

CESTAT Bangalore

395523.00

2013-2014

CESTAT Bangalore

1012600.00

2013-2014

High Court of Kerala

623203.00

April–September 2014

Commissioner (Appeals) Kochi
Income tax Income Tax Act 1961

40619060.00

Assessment Year 2010-11

Commissioner of Income Tax (Appeals)

27120000.00

Assessment Year 2012-13

Commissioner of Income Tax (Appeals)

* Amount is net of payments made.

8. In our opinion and according to the information and explanationsgiven to us and the records of the Company examined by us the Company has not defaultedin repayment of loans or borrowings to financial institutions banks government or duesto debenture holders.

9. According to the information and explanations given to us and therecords of the Company examined by us the moneys raised by way of public offer of debtinstruments and the term loans availed by the Company have been applied for the purposefor which they were raised.

10. During the course of our examination of the books and records ofthe Company carried out in accordance with generally accepted auditing practices in Indiaand according to the information and explanations given to us there have been instancesof fraud on the Company by its employees amounting to `25848608.00 as included in Note37 to the standalone financial statements. No fraud by the Company has been noticed orreported during the year nor have we been informed of any such case by the management.

11. According to the information and explanations given to us and therecords of the Company examined by us managerial remuneration has been paid or providedin accordance with the requisite approvals mandated by the provisions of Section 197 readwith Schedule V to the Act.

12. The Company is not a Nidhi Company. Accordingly the reportingrequirements under clause (xii) of paragraph 3 of the Order are not applicable.

13. According to the information and explanations given to us and therecords of the Company examined by us all transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and the details havebeen disclosed in Note 35 to the standalone financial statements as required by theapplicable accounting standard.

14. The Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures during the year.Accordingly the reporting requirements under clause (xiv) of paragraph 3 of the Order arenot applicable.

15. The Company has not entered into any non-cash transactions withdirectors or persons connected with the directors. Accordingly the reporting requirementunder clause (xv) of paragraph 3 of the Order is not applicable.

16. The Company is engaged in the business of Non-Banking FinancialInstitution and has obtained the certificate of registration under Section 45-IA of theReserve Bank of India Act 1934.

For Varma & Varma (FRN : 0045325)

Sd/-

V. Sathyanarayanan

Partner Chartered Accountants Membership No. 21941

Place: Kochi Date: May 16 2018

ANNEXURE ‘B' REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITREPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF MUTHOOT FINANCE LIMITED FORTHE YEAR ENDED MARCH 31 2018

Report on the Internal Financial Controls 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 referenceto standalone financial statements reporting of Muthoot Finance Limited ("theCompany") as of March 31 2018 in conjunction with our audit of the standalonefinancial statements of the Company for the year ended on that date.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing andmaintaining internal financial controls based on the internal controls with reference tostandalone financial statements reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the Institute of CharteredAccountants 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 its business includingadherence to Company's policies the safeguarding of its assets the prevention anddetection of frauds and errors the accuracy and completeness of the accounting recordsand the timely preparation of reliable financial information as required under the Act.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls systems with reference to financial statements reporting basedon our audit. We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the ‘Guidance Note') andthe Standards on Auditing issued by ICAI and deemed to be prescribed under Section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by the ICAI.Those Standards and the Guidance Note require that we comply with ethical requirements andplan and perform the audit to obtain reasonable assurance about whether adequate internalfinancial controls system with reference to financial statements reporting was establishedand maintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls system with reference to financialstatements reporting and their operating effectiveness. Our audit of internal financialcontrols system with reference to financial statements reporting included obtaining anunderstanding of internal financial controls system with reference to financial statementsreporting 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 ofthe risks of material misstatement of the financial statements whether due to fraud orerror.

We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internalfinancial controls system with reference to financial statements reporting.

Meaning of Internal Financial Controls with reference to FinancialStatements reporting

A Company's internal financial controls system with reference tofinancial statements reporting is a process designed to provide reasonable assuranceregarding the reliability of financial reporting and the preparation of financialstatements for external purposes in accordance with generally accepted accountingprinciples. A Company's internal financial controls system with reference tofinancial statements reporting includes 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 financialstatements in accordance with generally accepted accounting principles and that receiptsand expenditures 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 toFinancial Statements reporting

Because of the inherent limitations of internal financial controlssystem with reference to financial statements reporting 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 theinternal financial controls system with reference to financial statements reporting tofuture periods are subject to the risk that the internal financial controls system withreference to financial statements reporting may become inadequate because of changes inconditions or that the degree of compliance with the policies or procedures maydeteriorate.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system with reference to financial statements reporting andsuch internal financial controls system with reference to financial statements reportingwere operating effectively as at March 31 2018 based on the internal control withreference to financial statements reporting criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the ICAI.

Emphasis of matter

As per the gap-analysis conducted by an independent agency theinformation technology framework requires to be modified to be in line with the RBIguidelines prescribed for NBFC sector which we are informed will be complied within thetimelines specified by RBI.

Our opinion is not modified in respect of the above matter.

For Varma & Varma (FRN : 0045325)

Sd/-

V. Sathyanarayanan

Partner Chartered Accountants Membership No. 21941

Place: Kochi Date: May 16 2018