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Viji Finance Ltd.

BSE: 537820 Sector: Financials
NSE: VIJIFIN ISIN Code: INE159N01027
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VOLUME 234245
52-Week high 2.67
52-Week low 0.40
P/E 52.80
Mkt Cap.(Rs cr) 22
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 2.55
CLOSE 2.55
VOLUME 234245
52-Week high 2.67
52-Week low 0.40
P/E 52.80
Mkt Cap.(Rs cr) 22
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Viji Finance Ltd. (VIJIFIN) - Auditors Report

Company auditors report

Independent Auditors' Report on the Standalone Ind AS Financial Statements

To the Members ofVIJI FINANCE LIMITED

Report on the Audit of the Standalone Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statements of VIJIFINANCE LIMITED (‘the Company') which comprise the Balance sheet as at 31 March2020 the Statement of Profit and Loss including the Statement of Other ComprehensiveIncome the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and notes to the standalone Ind AS financial statements including a summary ofsignificant accounting policies and other explanatory information.

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone Ind AS financial statements give the informationrequired by the Companies Act 2013 as amended (‘the Act') in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company as at 31 March 2020 its profitincluding other comprehensive income its cash flows and the changes in equity for theyear ended on that date.

Basis for opinion

We conducted our audit of the standalone Ind AS financial statements in accordance withthe Standards on Auditing (SAs) as specified under section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the ‘Auditor'sresponsibilities for the audit of the standalone Ind AS financial statements' section ofour report. We are independent of the Company in accordance with the ‘Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules there under 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 audit opinion on the standalone Ind AS financial statements.

Emphasis of matter

We draw attention to note to the standalone Ind AS financial statements whichdescribes the uncertainty caused by Novel Coronavirus (COVID-19) pandemic with respect tothe Company's estimates of impairment of loans to customers and that such estimates may beaffected by the severity and duration of the pandemic. Our opinion is not modified inrespect of this matter.

Key audit matters

Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended 31 March 2020. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.

We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit How our audit addressed the key audit matters

• Impairment of financial assets as at balance sheet date (expected credit losses)

Ind AS 109 requires the Company to provide for impairment of its loan receivables(designated at amortised cost and fair value through other comprehensive income) using theexpected credit loss (ECL) approach. ECL involves an estimation of probability weightedloss on financial instruments over their life considering reasonable and supportableinformation about past events current conditions and forecasts of future economicconditions which could impact the credit quality of the Company's loans and advances.

In the process a significant degree of judgment has been applied by the Managementfor:

Staging of loans [i.e. classification in ‘significant increase in credit risk'(‘SICR') and ‘default' categories];

Grouping of borrowers based on homogeneity by using appropriate statistical techniques;

Estimation of behavioral life;

Determining macro-economic factors impacting credit quality ofreceivables;

Estimation of losses for loan products with no/minimal historical defaults.

Additional considerations on account of COVID-19

Global disruption caused by CoVID-19 pandemic combined with a total nationwide lockdownhas resulted in significant economic contraction in India. The Company being an NBFC (Non-Banking Finance Company) found it difficult to manage the cash flows including theoperating expenses and also faced many challenges in the debt servicing and to sustain theoperations of the company during the lockdown period.

Due to uncertainty prevailing in terms of its spread and control currently the companyis unable to present the exact impact of this pandemic on business but continue to assessthe situation on an ongoing basis.

In view of the high degree of Management's judgment involved in estimation of ExpectedCredit Losses if any accentuated by the COVID- 19 pandemic it is a key audit matter.

• IT systems and controls

Financial accounting and reporting processes especially in the financial servicessector are fundamentally reliant on IT systems and IT controls to process significanttransaction volumes hence we identified IT systems and controls over financial reportingas a key audit matter for the Company.

Automated accounting procedures and IT environment controls which include ITgovernance general IT controls over program development and changes access to programsand data and IT operations are required to be designed and to operate effectively toensure reliable financial reporting.

Read and assessed the Company's accounting policies for impairment of financial assetsand their compliance with Ind AS 109 and the governance framework approved by the Board ofDirectors pursuant to Reserve Bank of India guidelines issued on 13 March 2020.

Read and assessed the Company's policy with respect to moratorium pursuant to the RBIcircular and tested the implementation of such policy on a sample basis.

Evaluated the reasonableness of the Management estimates by understanding the processof ECL estimation and related assumptions and tested the controls around data extractionand validation.

Assessed the criteria for staging of loans based on their past-due status to checkcompliance with requirement of Ind AS 109. Tested a sample of performing (stage 1) loansto assess whether any SICR or loss indicators were present requiring them to be classifiedunder stage 2 or 3.

Assessed the additional considerations applied by the Management for staging of loansas SICR or default categories in view of Company's policy on moratorium.

Tested the ECL model including assumptions and underlying computation. Assessed thefloor/minimum rates of provisioning applied by the Company for loan products withinadequate historical defaults.

Tested assumptions used by the Management in determining the overlay for macro-economicfactors (including COVID-19 pandemic).

Assessed disclosures included in the standalone Ind AS financial statements in respectof expected credit losses including the specific disclosures made with regards to theimpact of COVID-19 on ECL estimation.

We tested the design and operating effectiveness of the Company's IT access controlsover the information systems that are important to financial reporting and variousinterfaces configuration and other identified application controls.

We tested IT general controls (logical access changes management and aspects of IToperational controls). This included testing requests for access to systems were reviewedand authorised.

We tested the Company's periodic review of access rights. We also tested requests ofchanges to systems for approval and authorisation.

In addition to the above we tested the design and operating effectiveness of certainautomated controls that were considered as key internal controls over financial reporting.

Other information

The other information comprises the information included in the Annual report but doesnot include the standalone Ind AS financial statements and our auditor's report thereon.The Company's Board of Directors is responsible for the other information.

Our opinion on the standalone Ind AS financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.

In connection with our audit of the standalone Ind AS financial statements ourresponsibility is to read the other information and in doing so consider whether suchother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated. If basedon the work we have performed we conclude that there is a material misstatement of thisother information we are required to report that fact. We have nothing to report in thisregard.

Responsibilities of Management and those charged with governance for the standalone IndAS Financial 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 Ind AS financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read with theCompanies (Indian Accounting Standards) Rules 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the 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 Ind AS financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.

In preparing the standalone Ind AS financial statements Management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessManagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.

Those charged with governance are also responsible for overseeing the Company'sfinancial reporting process.

Auditor's responsibilities for the audit of the standalone Ind AS Financial Statements

Our objectives are to obtain reasonable assurance about whether the standalone Ind ASfinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions ofuserstaken on the basis of these standalone Ind AS financial statements.

As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:

1 Identify and assess the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.

2 Obtain an understanding of internal control relevant to the audit in order to designaudit procedures that are appropriate in the circumstances. Under section 143(3)(I) of theAct we are also responsible for expressing our opinion on whether the Company hasadequate internal financial controls with reference to financial statements in place andthe operating effectiveness of such controls.

3 Evaluate the appropriateness of accounting policies used and the reasonableness ofaccounting estimates and related disclosures made by Management.

4 Conclude on the appropriateness of Management's use of the going concern basis ofaccounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.

5 Evaluate the overall presentation structure and content of the standalone Ind ASfinancial statements including the disclosures and whether the standalone Ind ASfinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.

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 standalone Ind AS financialstatements for the financial year ended 31 March 2020 and are therefore the key auditmatters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.

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 ofthe Act we give in the ‘Annexure 1' a statement on the matters specified inparagraphs 3 and 4 of the Order.

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 ofthose books;

c) The Balance Sheet the Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;

d) In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;

e) on the basis of the written representations received from the directors as on 31March 2020 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 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 controls over financialreporting of the Company with reference to these standalone Ind AS financial statementsand the operating effectiveness of such controls refer to our separate Report in‘Annexure 2' to this report;

g) In our opinion the managerial remuneration for the year ended 31 March 2020 hasbeen paid/provided by the Company to its directors in accordance with the provisions ofsection 197 read with Schedule V to 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 as amended inour opinion and to the best of our information and according to the explanations given tous:

a) The Company has no pending litigations on its financial position in its standaloneInd AS financial statements;

b) The Company do not have any long term contracts including derivative contracts tothe standalone Ind AS financial statements;

c) There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.

For SHYAM NAGORI & COMPANY

Chartered Accountants

ICAI Firm registration number: 004573C

Shyam Kumar Nagori

Proprietor

Membership number: 073609

UDIN-20073609AAAABT9458

Place: Indore

Date: June 26th 2020

Annexure 1 to the Independent Auditors' Report

(Referred to in our report of even date)

I. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets;

(b) The management during the year has physically verified all the assets and there isa regular program of verification which in our opinion is reasonable having regard tothe size of the Company and the nature of its assets. No material discrepancies werenoticed on such verification.

(c) The company does not own any immovable property.

II. The Company is a service company primarily rendering financial services.Accordingly it does not hold any physical inventories.

Thus paragraph (ii) of the order is not applicable to the Company.

III. According to information and explanations given to us the Company has grantedloan to one of the wholly owned subsidiary company and has complied with the provisions ofsection 189 of the Companies Act 2013.

IV. In our opinion and according to the information and explanation given to us thecompany has complied with the provision of Section 185 and 186 of the Act with respect toloans and investment made.

V. The Company has not accepted any deposits from the public.

VI. As per information & explanations given to us that the maintenance of costrecords has not been prescribed by the Central Government under subsection 1 of section148 of the Companies Act 2013 for any product or services of the Company.

VII. According to the information and explanations given to us in respect of statutorydues:

(a) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company amounts deducted / accrued in the books ofaccount in respect of undisputed statutory dues including provident fund sales tax valueadded tax duty of customs service tax cess and other material statutory dues have beenregularly deposited during the year by the Company with the appropriate authorities.However As explained to us Income tax dues of Assessment Year 201920 have not beendeposited till date of audit. As explained to us the Company did not have any dues onaccount of employees' state insurance and duty of excise.

(b) According to the information and explanations given to us no undisputed amountspayable in respect of provident fund income tax sales tax value added tax duty ofcustoms cess and other material statutory dues except service tax were in arrears as at31 March 2020 for a period ofmore than six months from the date they became payable.

Name of the Statute Nature of the dues Amount (Rs.)
Goods & Service Tax (GST) Regular Tax liability 21.31 Lakh
Service Tax Regular Tax liability 1.62 Lakh

(c) According to the information and explanations given to us there are no dues ofincome tax or sales tax or wealth tax or service tax or duty of customs or duty of exciseor value added tax of cess which have not been deposited on account of any dispute invarious offices of the Company as a whole as on 31st March 2020.

VIII. The company has not defaulted in repayment of loans or borrowing to a financialinstitution bank Government or dues to debenture holders

IX. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph (ix) of the order is not applicable.

X. According to the information and explanations given to us no material fraud on orby the company by its officers or employees has been noticed or reported during the courseof our audit.

XI. According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has paid/provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofSection 197 read with Schedule V to the Act.

XII. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company Accordingly paragraph (xii) of the order is notapplicable.

XIII. According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with Sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.

XIV. According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year.

XV. 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 non-cashtransactions with directors or persons connected with him. Accordingly paragraph (xv) ofthe order is not applicable.

XVI. The Company is registered under section 45-IA of the Reserve Bank of India Act1934 bearing registration No. 03-00080 Dt. 29th October 1998 granting the company tocarry of the business of a non-banking financial company.

For SHYAM NAGORI & COMPANY

Chartered Accountants

ICAI Firm registration number: 004573C

Shyam Kumar Nagori

Proprietor

Membership number: 073609

UDIN-20073609AAAABT9458

Place: Indore

Date: June 26th 2020

Annexure - "2" to the Auditors' Report

(Refer to in our Report of even date)

Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of VijiFinance Limited ("the Company") as at March 31 2020 in conjunction with ouraudit of the Standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

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 ("ICAI"). 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 safeguarding ofits 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.

Auditors' Responsibility

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 issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such controls operated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe 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 Standalone financial statements whether due to fraud orerror.

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 controls systemover financial reporting with reference to these standalone Ind AS financial statements.

Meaning of Internal Financial Controls over Financial Reporting

A Company's internal financial control over financial reporting with reference to thesestandalone Ind AS financial statements is a process designed to provide reasonableassurance regarding the reliability of financial reporting and the preparation ofStandalone financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting with reference to these standalone Ind AS financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe Company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorizations of Management and Directors of the Company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorizedacquisition use or disposition of the company's assets that could have a material effecton the Standalone financial statements.

Inherent Limitations of Internal Financial Controls over Financial Reporting

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 with reference to these standalone Ind AS financial statementsmay become inadequate because of changes in conditions or that the degree of compliancewith the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls over financial reporting with reference to these standalone Ind ASfinancial statements and such Internal financial controls over financial reporting withrefenece to these standalone Ind AS financial statements were operating effectively as atMarch 31 2020 based on the internal control over financial reporting criteria establishedby the Company considering the essential components of internal control stated in theGuidance Note on Audit of Internal Financial Controls over Financial Reporting issued bythe Institute of Chartered Accountants of India.

For SHYAM NAGORI & COMPANY

Chartered Accountants

ICAI Firm registration number: 004573C

Shyam Kumar Nagori

Proprietor

Membership number: 073609

UDIN-20073609AAAABT9458

Place: Indore

Date: June 26th 2020

ANNEXURE TO THE AUDITORS REPORT OF EVEN DATED OF VIJI FINANCE LTD. INDORE ON THEACCOUNTS FOR THE YEAR ENDED 31ST MARCH 2020.

1. The Company has obtained registration under section 45IA of the Reserve Bank ofIndia Act 1934 vide certificate no.03-00080 Dt. 29th October 1998.

2. The Board of Directors of the Company has passed a resolution for not holding anypublic deposit as on date as well as nonacceptance of any public deposit in future withoutobtaining written prior permission from the Reserve Bank of India.

3. The Company has not accepted any public deposit during the financial year ended on31st March 2020.

4. The Company has complied with the prudential norms relating to income recognitionaccounting standards and assets classification as applicable to it subject to Notes tothe accounts.

5. Necessary provision if any has been made for all bad and doubtful debts during theyear ending 31st March 2020.

AS PER OUR REPORT OF EVEN DATE

For SHYAM NAGORI & COMPANY

Chartered Accountants

ICAI Firm registration number: 004573C

Shyam Kumar Nagori

Proprietor

Membership number: 073609

UDIN-20073609AAAABT9458

Place: Indore

Date: June 26th 2020.

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