You are here » Home » Companies » Company Overview » New India Assurance Company Ltd

New India Assurance Company Ltd.

BSE: 540769 Sector: Financials
NSE: NIACL ISIN Code: INE470Y01017
BSE 00:00 | 09 Apr 109.35 2.80
(2.63%)
OPEN

103.60

HIGH

115.40

LOW

103.50

NSE 00:00 | 09 Apr 109.10 2.70
(2.54%)
OPEN

106.55

HIGH

115.40

LOW

106.00

OPEN 103.60
PREVIOUS CLOSE 106.55
VOLUME 31962
52-Week high 195.65
52-Week low 75.00
P/E 17.67
Mkt Cap.(Rs cr) 18,021
Buy Price 107.00
Buy Qty 67.00
Sell Price 109.35
Sell Qty 100.00
OPEN 103.60
CLOSE 106.55
VOLUME 31962
52-Week high 195.65
52-Week low 75.00
P/E 17.67
Mkt Cap.(Rs cr) 18,021
Buy Price 107.00
Buy Qty 67.00
Sell Price 109.35
Sell Qty 100.00

New India Assurance Company Ltd. (NIACL) - Auditors Report

Company auditors report

To

The Members of

The New India Assurance Company Limited Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of The New IndiaAssurance Company Limited

("the Company") which comprise the Balance Sheet as at March 31 2018 theannexed Revenue Accounts of Fire Marine and Miscellaneous Insurance Business(collectively known as ‘Revenue Accounts') Profit and Loss Account and the Receiptand Payments Account for the year then ended and a summary of significant accountingpolicies and other explanatory information in which are incorporated returns for the yearended on that date: (a) From Forty three Regional offices (including 9 LCO's) Fourhundred and Sixty Divisional offices audited by the other firms of Auditors appointed bythe Comptroller and Auditor General of India under section 139 of the Companies Act2013;and (b) From Nine Foreign Branches Seven Foreign Agency offices audited by local auditorsappointed by the company and unaudited returns of two Run off offices and onerepresentative office.

Management's Responsibility for the Standalone Financial Statements:

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 The Insurance Act 1938 and for the AccountingPrinciples as prescribed in the Insurance Regulatory and Development Authority(Preparation of Financial Statements and Auditors' Report of Insurance Companies)Regulations 2002 and orders or direction issued by the Insurance Regulatory andDevelopment Authority("the Act Rules and Regulations") with respect to thepreparation of these standalone financial statements that give a true and fair view of thefinancial position financial performance and cash flows of the Company in accordance withthe accounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules2014. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of "the Act Rules and Regulations" forsafeguarding the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the financial statements that give a true and fair viewand are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

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

We have taken into account the provisions of the "The Act Rules andRegulations" the accounting and auditing Standards and matters which are required tobe included in the audit report under the provisions of the Act Rules and Regulationsmade there under. We conducted our audit in accordance with the Standards on Auditingspecified under Section 143(10) of the Companies Act 2013. Those Standards require that wecomply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether the financial statements are free from material misstatement. Anaudit involves performing procedures to obtain audit evidence about the amounts and thedisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements whether due to fraud or error. In making those risk assessments the auditorconsiders internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

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

Basis for Qualified Opinion

Balances due to/from persons or bodies carrying on Insurance Business includingreinsurers are subject to confirmations and reconciliation the ageing of these balancesand records relating to old balances are not available in the records of the company.Balances of Inter office accounts control accounts few Bank accounts including thoserelated to Pradhan Mantri Fasal Bima Yojna certain loans and other accounts at certainoffices are also pending for reconciliation/confirmation and consequential adjustmentseffect of which if any is not ascertainable and cannot be commented upon. The impact ofthe above on year end restatement of these balances recorded in foreign currency asrequired under Accounting Standard-11 issued under section 133 of the Companies Act 2013could not be ascertained. (Refer Note 15 of Notes to accounts in schedule 16B).

Overall impact of the above and the consequential effects on Revenue Accounts Profitand Loss Account assets and liabilities and Reserve and Surplus as on March 31 2018 arenot ascertainable and cannot be commented upon.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the matter described in the Basis forQualified Opinion paragraph the aforesaid standalone financial statements dealt with bythis report read together with schedules significant accounting policies and disclosuresgive the information required by the "Act Rules and Regulations" in the mannerso required and give a true and fair view in conformity with the accounting principlesgenerally accepted in India as applicable to Non-Life Insurance Companies: (i) In the caseof the Balance Sheet of the state of affairs of the company as at March 31 2018; (ii) Incase of revenue accounts of the Profit in Fire Marine & Miscellaneous Business forthe year ended on that date; (iii) In case of Profit and Loss Account of the Profit forthe year ended on that date and (iv) In case of Receipt and Payments Account of thereceipts and payments for the year ended on that date.

Emphasis of Matter

We draw attention to the following Notes to Accounts: a) Note No. 3 in Schedule 16 Bregarding recognition of Reserve for Unexpired risk by 1/365 method as per the approval ofIRDAI in case of domestic business while the implementation of systems and procedures tocompute the same in case of Foreign business in accordance with 1/365 method is pendingand systems in case of domestic business are being strengthened. b) Note No.10 regardingdeferment of additional gratuity liability pursuant to the amendment in the Payment ofGratuity Act1972 to the extent of Rs. 27001.78 lakhs and deferment of expenditurerelating to additional liability towards pension on account of pay revision to the extentof Rs. 690.80 lakhs as per the deferment permitted by the IRDAI c) Note No. 19 regardingoutstanding dues from agent amounting to Rs. 2043.30 lakhs for more than 90 days for whichthe branch auditors have not been able to assess the repayment capacity of the agent whilethe management has taken steps for recovery of these dues. d) The company's internalcontrols system and Internal audit specially in area of data input and validation insoft-wares Reinsurance accounts PMFBY and other Government sponsored Health schemesrequires strengthening. (Refer Note No. 20) e) Rs. 2171.34 Lakhs has been withheld /deducted by Govt of Rajasthan under Bhamashah Scheme towards rejection of claims under thescheme and related matters since in the opinion of the management the same will berecovered. (Refer Note No 24)

Our opinion is not modified in respect of these matters.

Other Matters a) We did not audit the financial statements of Forty Three Regionaloffices (including 9 LCO's) Four hundred and sixty Divisional offices Nine ForeignBranches Seven Foreign Agency offices Two Run off offices and one representativeofficeincluded in the financial statements of the Company whose financial statements /financial information reflect total assets of Rs. 4334856.34 lakhs as at March 31 2018and total revenues of Rs. 2679247.39 lakhs for the year ended on that date as consideredin the financial statements. The financial statements/information of these offices exceptin case of Run-off and representative offices which have remained unaudited have beenaudited by the other firm of auditors whose reports have been furnished to us and ouropinion in so far as it relates to the amounts and disclosures included in respect ofthese branches is based solely on the report of such branch auditors. b) The actuarialvaluation of liability in respect of claims Incurred But Not Reported(IBNR) and thoseIncurred but Not Enough Reported (IBNER) as at March 312018 is as certified by theCompany's Appointed Actuary and our opinion in so far as it relates to the amounts anddisclosures related to such liability is based solely on such report.

Our opinion is not modified in respect of this matter.

Report on Other Legal and Regulatory Requirements

As required by Section 143 (3) of the Companies Act 2013 and Insurance Regulatory andDevelopment Authority (Preparation of financial Statements and Auditors' Report ofInsurance Companies) Regulations 2002 and orders or direction issued by the InsuranceRegulatory and Development Authority we report that: a) We have sought and except for thematters described in the Basis for Qualified Opinion paragraph and the matters relatedto vigilance department which are stated to be (Refer Note 23)obtained all theinformation and explanations which to the best of our knowledge and belief were necessaryfor the purposes of our audit.; b) Except for the possible effects of the matter describedin the Basis for Qualified Opinion paragraph above in our opinion proper books ofaccounts have been maintained by the Company so far as it appears from our examination ofthose books and proper returns both audited and unaudited from Regional officesDivisional Offices branches and other offices not visited by us have been received. c)The reports of the Regional Auditors consolidating the Divisional Auditors report Reportsof foreign branches and foreign agency offices audited under section143(8) of the Act bythe branch auditors have been sent to us and have been properly dealt with by us inpreparing this report in the manner considered necessary by us. d) The Balance sheetRevenue account Profit and Loss account and the Receipts and Payments Account dealt withby the report are in agreement with the books of account and with the returns receivedfrom offices not visited by us. e) In our opinion the aforesaid standalone financialstatements have been prepared in accordance with the requirements of the Insurance Act1938 (4 of 1938) the Insurance Regulatory and Development Act 1999 (41 of 1999) and theCompanies Act 2013 to the extent applicable and in the manner so required; f) Except forthe possible effects of the matter described in the Basis for Qualified Opinion paragraphin our opinion the aforesaid Standalone Financial Statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014; g) The matter described in the Basis for Qualified Opinionparagraph above in our opinion may not have an adverse effect on the functioning of theCompany; h) The qualification relating to the maintenance of accounts and other mattersconnected therewith are as stated in the Basis for Qualified Opinion paragraph above. i)On the basis of written representations received from the directors as on March 31 2018and taken on record by the Board of Directors none of the directors disqualifiedas on March 31 2018 from being appointed as a director in terms of section 164(2) of theAct. j) The accounting policies adopted by the company are appropriate and in compliancewith the applicable Accounting Standards specified under Section 133 of the Act read withRule 7 of the Companies (Accounts) Rules 2014 and with the Accounting Principles asprescribed in the Insurance Regulatory and Development Authority (Preparation of financialStatements and Auditors' Report of Insurance Companies) Regulations 2002 and orders ordirection issued by the Insurance Regulatory and Development Authority. k) The actuarialvaluation of liability in respect of claims Incurred But Not Reported (IBNR) and thoseIncurred but Not Enough Reported (IBNER) as at 31st March 2018 have been duly certifiedby the Company's Appointed Actuary and relied upon by us. The Appointed Actuary has alsocertified that the assumptions considered by him for such valuations are in accordancewith guidelines and norms prescribed by the Insurance Regulatory and Development Authorityof India (IRDAI) and the Actuarial Society of India in concurrence with the IRDAI. l) Asper the information and explanations provided to us the investments have been valued inaccordance with the provisions of the Insurance Act the regulations and orders/directions issued by IRDAI in this regard. m) With respect to the other matters to beincluded in the Auditor's Report in accordance with Rule 11 of the Companies (Audit andAuditors) Rules 2014 in our opinion and to the best of our information and according tothe explanations given to us: i) The company has disclosed the impact of pendinglitigations on its financial position in its financial statements Refer Schedule 16 C tothe standalone financial statements; ii) The company has made provision as required underthe applicable law or accounting standards for material foreseeable losses on long termcontracts. There are no outstanding derivative contracts at the Balance Sheet date. iii)There were no amounts which were required to be transferred to the Investor Education andProtection Fund by the Company. n) Further on the basis of our examination of books andrecords of the company and according to the information and explanation given to us and tothe best of our knowledge and belief we certify that: i) We have reviewed the managementreport attached with the Financial Statements and there are no apparent mistakes ormaterial inconsistencies between the management report and the standalone financialstatements; ii) Based on the management representation by officer of the company chargedwith compliance nothing has come to our attention which causes us to believe that thecompany has not complied with the terms and conditions of registration as stipulated byIRDAI; and iii) No part of the assets of the policyholders' funds has been directly orindirectly applied in contravention of the provisions of the Insurance Act 1938 (4 of1938) relating to the application and investments of the policyholders' funds. o) Withrespect to the adequacy of the internal financial controls over financial reporting of theCompany and the operating effectiveness of such controls refer to our separate Report in"Annexure A".

As required under section 143(5) of the Companies Act 2013 based on our audit asaforesaid we enclose herewith as per "Annexure B" the directions includingsub-directions issued by the Comptroller & Auditor General of India action takenthereon and the financial impact on the accounts and financial statements of the Company.

For R. Devendra Kumar & Associates For A. Bafna & Co. For NBS & Co
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No. 114207 W Firm Reg. No. 003660C Firm Reg. No. 110100W
D.K.Gupta M.K. Gupta Pradeep J Shetty
Partner Partner Partner
Membership No. 009032 Membership No. 073515 Membership No. 046940
Place: Mumbai
Date: May 11th 2018

"ANNEXURE A" REFERRED TO IN THE INDEPENDENT AUDITOR'S REPORT ON THESTANDALONE FINANCIAL STATEMENTS OF THE NEW INDIA ASSURANCE CO. LTD. FOR THE FINANCIAL YEAR2017-18 Report on the Internal Financial Controls under Clause (i) of Sub-section 3 ofSection 143 of the Companies Act 2013

1. We have audited the internal financial controls over financial reporting of THENEW INDIA ASSURANCE CO LTD. ("the Company") as of March 31 2018 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date. These financial statements incorporated returns received: a) FromForty three Regional offices (including 9 LCO's) Four hundred and Sixty Divisionaloffices audited by the other firms of Auditors appointed by the Comptroller and AuditorGeneral of India under section 139 of the Companies Act 2013; and b) From Nine ForeignBranches Seven Foreign Agency offices audited by local auditors appointed by the companyand unaudited returns of three Run off offices and one representative office.

Management's Responsibility for Internal Financial Controls

2. The Company's management is responsible for establishing and maintaining internalfinancial controls based on "the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls over Financial Reportingissued by the Institute of Chartered Accountants of India". These responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to 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 Companies Act 2013.

Auditors' Responsibility

3. Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the" Guidance Note") and the Standards on Auditing to the extent applicable toan audit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

4. Our audit involves performing procedures to obtain audit evidence about the adequacyof the internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

5. Report of branch auditors relating to London Branch is not in the accordance withthe Indian Law & regulations and therefore the internal controls over financialreporting relating to London Branch has not been considered in this report and cannot becommented upon.

6. Except for the possible effect of matters as stated in note No. 5 we believe thatthe audit evidence we have obtained is sufficient and appropriate to provide a basis forour qualified opinion on the Company's internal financial controls system over financialreporting.

Meaning of Internal Financial Controls over Financial Reporting

7. A company's internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial 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 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 authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

8. Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Qualified Opinion

9. According to the information and explanation given to us and based on our audit thefollowing internal control weaknesses of material nature have been identified as at March31 2018: a. Confirmation and reconciliation of various balances relating to co insurersreinsurers few bank accounts inter office accounts and other control accounts arepending and are at various stages.; b. Inadequate controls are observed with regard toageing of insurance receivables;

The Company's internal control systems especially in area of data input and validationin various soft-wares and recording of intimated claims at the offices of the companyincluding internal audit require strengthening.

Further to above the management of the company has appointed external consultant toassess the internal financial control framework in the company. Though the interim reportsubmitted by the consultants in case of certain processes does not identify any seriousissues the final report is still awaited. Review of design and testing of the riskcontrol matrix at Regional level/ HO level review and testing of entity level controlsand final report is yet to be received.

10. A ‘material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial reporting such that there is a reasonablepossibility that a material misstatement of the company's financial statement will not beprevented or detected on a timely basis. 11. In our opinion except for the possibleeffects of the internal control weaknesses described above on the achievements of theobjectives of the control criterion the company has maintained in all material respects adequate internal financial control over financial reporting and such internal financialcontrols over financial reporting were operating effectively as of March 31 2018 basedon "the internal control over financial 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 Institute ofChartered Accountants of India".

12. We have considered the material weaknesses identified and reported above indetermining the nature timing and extent of audit tests applied in our audit of theMarch 31 2018 standalone financial statements of the Company and these materialweaknesses do not affect our opinion on the Standalone financial statements of the Companyexcept to the extent of our qualification as contained in our separate report on theStandalone financial statements of the company.

For R. Devendra Kumar & Associates For A. Bafna & Co. For NBS & Co
Chartered Accountants Chartered Accountants Chartered Accountants
Firm Reg. No. 114207 W Firm Reg. No. 003660C Firm Reg. No. 110100W
D.K.Gupta M.K. Gupta Pradeep J Shetty
Partner Partner Partner
Membership No. 009032 Membership No. 073515 Membership No. 046940
Place: Mumbai
Date: May 11th 2018