Muthoot Finance Ltd.
|BSE: 533398||Sector: Financials|
|NSE: MUTHOOTFIN||ISIN Code: INE414G01012|
|BSE 00:00 | 17 May||1221.35||
|NSE 00:00 | 17 May||1221.55||
|Mkt Cap.(Rs cr)||49,001|
|Mkt Cap.(Rs cr)||49000.56|
Muthoot Finance Ltd. (MUTHOOTFIN) - Auditors Report
Company auditors report
To The Members of Muthoot Finance Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofMuthoot Finance Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2020 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and Cash Flow Statement for the year ended on thatdate and the notes to the financial statements including a summary of significantaccounting policies and other explanatory information.
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 Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2020its Profit total comprehensive income changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing(SAs) specified under section 143(10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements section of our report. We are independent of the Company in accordance with theCode of Ethics issued by the Institute of Chartered Accountants of India together with theethical requirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the standalone financial statements.
Emphasis of matter
We draw attention to Note 56 to the standalone financial statementsregarding outbreak of the COVID-19 pandemic and the consequential lock-down restrictionsimposed by the Government which as per the assessment of the management has notsignificantly impacted the operations and financial position of the Company.
Our opinion is not modified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professionaljudgement were of most significance in our audit of the financial statements of thecurrent period. These matters were addressed in the context of our audit of the financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
Information Other than the Standalone Financials Statements andAuditor's Report thereon (Other Information)
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the CorporateOverview Board's Report Management Discussion and Analysis Report BusinessResponsibility Report and Report on Corporate Governance in the Annual Report of theCompany for the financial year 2019-20 but does not include the standalone financialstatements and our auditor's report thereon.
The reports containing the other information as above are expected tobe made available to us after the date of this auditor's report.
Our opinion on the financial statements does not cover the otherinformation and we will not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information identified above when it becomesavailable and in doing so consider whether the other information is materiallyinconsistent with the standalone financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated.
When we read the reports containing the other information if weconclude that there is a material misstatement therein we are required to communicate thematter to those charged with governance.
Responsibilities of Management and Those Charged with Governance forthe Standalone Financial Statements.
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards specified under section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgements and estimates that are reasonable and prudent; and designimplementation 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 isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company'sfinancial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect a material misstatement when itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgement and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud
or error design and perform audit procedures responsive to thoserisks and obtain audit evidence that is sufficient and appropriate to provide a basis forour opinion. The risk of not detecting a material misstatement resulting from fraud ishigher than for one resulting from error as fraud may involve collusion forgeryintentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to theaudit including internal audit system in vogue in order
to design audit procedures that are appropriate in the circumstances.Under section 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls with reference to financialstatements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis 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 standalone financial statements or if such disclosures areinadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
Materiality is the magnitude of misstatements in the standalonefinancial statements that individually or in aggregate makes it probable that theeconomic decisions of a reasonably knowledgeable user of the standalone financialstatements may be influenced. We consider quantitative materiality and qualitative factorsin (i) planning the scope of our audit work and in evaluating the results of our work; and(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements of the current period and are therefore the key audit matters. Wedescribe these matters in our auditor's report unless law or regulation precludes publicdisclosure about the matter or when in extremely rare circumstances we determine that amatter should not be communicated in our report because the adverse consequences of doingso would reasonably be expected to outweigh the public interest benefits of suchcommunication.
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 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 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. Since the keyoperations of the Company are automated with the key applications integrated to the corebanking system/ ERP the audit is carried out centrally as all the necessary records anddata required for the purposes of our audit are available therein.
(c) The Balance Sheet the Statement of Profit and Loss (includingOther Comprehensive Income) the Statement of Changes in Equity and the Cash FlowStatement dealt with by this Report are in agreement with the books of account.
(e) On the basis of the written representations received from thedirectors as on March 31 2020 taken
on record by the Board of Directors none of the directors isdisqualified as on March 31 2020 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controlsover financial statement reporting of the Company and the operating effectiveness of suchcontrols refer to our separate Report in 'Annexure B'.
(g) With respect to the other matters to be included in the Auditor'sReport in accordance with Section 197(16) of the Act in our opinion and to the best ofour information and according to the explanations given to us the remuneration paid/provided
by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
(h) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 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 itsfinancial position in its standalone financial statements
- Refer Note 38(A)(a) to the standalone financial statements
ii. The Company has made provision as required under the applicablelaw or accounting standards for material foreseeable losses
if any on long-term contracts including derivative contracts
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company except for theinstances stated in Note 18.1 to the standalone financial statements
ANNEXURE A' REFERRED TO IN PARAGRAPH 1 UNDER THE HEADING "REPORTON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITOR'S REPORT OFEVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF MUTHOOT FINANCE LIMITED FOR THE YEARENDED MARCH 31 2020
1. (a) The company is maintaining records showing
full particulars including quantitative details and situation of fixedassets which however requires to be updated.
(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 materialdiscrepancies were noticed on 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 in a prior year the title deeds continue to remain in the name of theerstwhile 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 unsecured loans to twosubsidiary companies during the year and the same is covered in the register maintainedunder 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 as perschedule 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 orprovided security for which the provisions of sections 185 and 186 of the Act areapplicable.
5. The Company has not accepted any deposits from the public during theyear which attract the directives issued by the Reserve Bank of India. Being a NonBankingFinance Company the provisions of Sections 73 to 76 or any other relevant provisions ofthe Act and the rules framed thereunder regarding acceptance of deposits are notapplicable. Therefore the reporting requirement under clause (v) of paragraph 3 of theOrder 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.
7. (a) As per the information and explanations furnished
to us and according to our examination of the records of the Companythe Company has been generally regular in depositing undisputed statutory dues includingProvident Fund Employee's State Insurance Income Tax Goods and Services Tax Dutyof Customs Cess and any other material statutory dues as applicable to the Company tothe 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 :Insurance Income Tax Goods and Services Tax
Duty of Customs Cess and other material statutory dues wereoutstanding as at March 31 2020 for a period of more than six months from the date theybecame 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 Value Added Tax or Goods and Services Taxas at March 31 2020.
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 2020:
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 Rs. 23.20 millions as included inNote 50 to the standalone financial statements. No fraud by the company has been noticedor reported 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 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 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 39 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
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.
ANNEXURE B' REFERRED TO IN PARAGRAPH 2(f) UNDER THE HEADING"REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR INDEPENDENT AUDITOR'SREPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF MUTHOOT FINANCE LIMITED FORTHE YEAR ENDED MARCH 31 2020
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 2020 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.
Our responsibility is to express an opinion on the Company's internalfinancial controls systems with reference to financial statements reporting based on ouraudit. We conducted our audit in accordance with the Guidance Note on Audit of InternalFinancial Controls Over Financial Reporting (the "Guidance Note") and theStandards on Auditing issued by ICAI and deemed to be prescribed under section 143(10) ofthe Act to the extent applicable to an audit of internal financial controls bothapplicable to an audit of Internal Financial Controls and both issued by the ICAI. ThoseStandards and the Guidance Note require that we comply with ethical requirements and planand 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 internalfinancial controls system with reference to financial statements reporting includedobtaining an understanding of internal financial controls system with reference tofinancial statements reporting assessing the risk that a material weakness exists andtesting and evaluating the design and operating effectiveness of internal control based onthe assessed risk. The procedures selected depend on the auditor's judgementincluding the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error.
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 to financialstatements reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company;
(2) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 the internal financial controls systemwith reference to financial statements reporting to future periods are subject to the riskthat the internal financial controls system with reference to financial statementsreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
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 2020
based on the internal control 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 ICAI.