Mar 31, 2016
To the Members of Escorts Finance Limited
1. Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Escorts Finance Limited (''the Company"), which comprise the balance sheet as at 31st March 2016, the statement of profit and loss and the cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
2. Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the Act") with respect to the preparation and presentation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding the assets of the Company and for preventing and detecting frauds and other irregularities; selection and application of appropriate accounting policies; making judgments and estimates that are reasonable and prudent; and design, implementation and maintenance of adequate internal financial controls, that were operating effectively for ensuring the accuracy and completeness of the accounting records, relevant to the preparation and presentation of the financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these standalone financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor''s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company''s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
4. Basis of Qualified Opinion
Attention is invited to the following matters in the Notes to the Financial Statements:
i. Note No. 21, regarding non-maintenance of investments in Government Securities as liquid assets in terms of Section 45-IB of Reserve Bank of India Act, 1934;
ii. Note No. 22, regarding non-maintenance of minimum capital adequacy ratio working out to -6517.79 (negative) as against 37.77 required to be maintained in terms of Non-Banking Financial Companies requirements;
iii. Note No. 24, regarding the Company''s credit rating not sought post November 2005;
iv. Note No. 25, regarding unpaid/unclaimed matured Fixed Deposit Liability aggregating to Rs.1278.78 lakhs as on balance sheet date;
v. Note No. 29, regarding non-provision of preference dividend on cumulative preference shares amounting to Rs.95.00 lakhs for the year;
vi. Note No. 30, regarding non-determination of Employee Terminal Benefits on actuarial basis. In the absence of the same, the exact impact cannot be ascertained in the books of accounts.
5. Opinion
In our opinion and to the best of our information and according to the explanations given to us, except for the effect of the matter described in sub-paragraph (iv), (v) and (vi) under the Basis for Qualified Opinion above,
the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March 2016 and its profit and its cash flow for the year ended on that date.
6. Emphasis of Matters
We draw attention to the following matters in the Notes to the Financial Statements;
(a) Note No. 27 in the financial statements which indicates that the Company had accumulated losses at the close of the financial year with its net worth continuing to stand fully eroded and the financial statements have been prepared on going concern basis for reasons explained by the management, including the possibilities of venturing into newer business areas. We have relied on the representation made to us by the management.
(b) Note No. 23 in the financial statements which states that the company had filed an application with the Reserve Bank of India for de-registration of its NBFC status and accordingly Certificate of Registration (COR) had also been surrendered. Subsequent to the balance sheet date of 31st March 2016, the approval for de-registration of the NBFC Status of the Company has been received vide letter dated 06th May 2016.
Our opinion is not qualified in respect of the above matters.
7. Report on Other Legal and Regulatory Requirements
A. 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 the Annexure A, a statement on the matters specified in the paragraph 3 and 4 of the order.
B. 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 best of 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 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 cash flow statement dealt with by this Report are in agreement with the books of account;
(d) except for the effect of the matters described in sub-paragraph (iv), (v) and (vi) under the Basis for Qualified Opinion above, in our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) The matter described in sub-paragraph (a) under the Emphasis of Matters paragraph above, in our opinion, may have an adverse effect on functioning of the Company;
(f) on the basis of the written representations received from the directors as on 31st March 2016 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March 2016 from being appointed as a director in terms of Section 164 (2) of the Act;
(g) with respect to the adequacy of the internal financial controls over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate report in "Annexure B"; and
(h) with respect to the other matters to be included in the Auditor''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 the explanations given to us:
i. The Company has made disclosure regarding pending litigations in its standalone financial statements, as referred to in Note No. 20 to the financial statements including claims against the Company for which amount is presently not ascertainable;
ii. The Company did not have any long term contracts including derivative contracts for which there were any material foreseeable losses;
iii. The Company has not deposited amounts to the Investor Education and Protection Fund against unpaid fixed deposit liabilities including interest thereon as referred to in Note No. 25 to the financial statements.
ANNEXURE - A TO THE INDEPENDENT AUDITORS'' REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF ESCORTS FINANCE LIMITED
(Referred to in sub para A of Para 7 under the heading of "Report on Other Legal and Regulatory Requirements")
We Report that:
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) The Company has a regular programme of physical verification of its fixed assets by which fixed assets are verified in a phased manner in reasonable intervals. In accordance with this programme, certain fixed assets were verified during the year and no material discrepancies were noticed on such verification. In our opinion, this periodicity of physical verification is reasonable having regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of our examination of the records of the Company, it does not hold any immovable properties. Thus, Clause (i) (c) of the Order is not applicable to the Company.
(ii) In view of the nature of the operations of the Company, the Company does not hold any inventory other than stock of repossessed assets, which have been verified by the management during the year. Provision has been made in respect of discrepancies / diminution in the value of such stock as at the end of the year end;
(iii) According to the information and explanations given to us, the Company has not granted any loans, secured or unsecured, to companies, firms or other parties covered in the register maintained under Section 189 of the Companies Act, 2013. Consequently, Clause (iii)(a), (iii)(b) and (iii)(c) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations given to us, the Company has not dealt with any loans, guarantee, investments and security under the provision of section 185 and 186 of the Companies Act 2013. Consequently, Clause (iv) of the Order is not applicable to the Company.
(v) In respect of accepted of any deposits from the public, in our opinion and according to the information and explanation given to us, the directives issued by Reserve Bank of India and the provisions of Section 73 to 76 or any other relevant provisions of the Companies Act, 2013, the Company had not complied with the said norms in relation to repayment of deposit on their respective maturity dates. However, in accordance with the Hon''ble Delhi High Court''s Order / direction dated March 04, 2011, Escorts Benefit Trust (EBT) created by Escorts Limited, repaid matured fixed deposit liability against the claims received till March 03, 2013. Claims received after said dates are also being entertained and settled after due verification. As at March 31, 2016, the unpaid/unclaimed matured fixed deposits liability (including interest thereon) is Rs. 1278.78 lacs (Previous Year Rs. 1357.40 lacs).
(vi) In our opinion and according to the information and explanations given to us, the Central Government has not prescribed the maintenance of cost records under section 148(1) of the Act, for any of the services rendered by the Company. Consequently, Clause (vi) of the Order is not applicable to the Company.
(vii) (a) According to the information and explanations given to us and on the basis of our examination of the books of
accounts, the Company has been generally regular in depositing undisputed statutory dues including Provident Fund, Employee State Insurance, Income-Tax, Sales Tax, Service Tax, Custom Duty, Excise Duty, value added tax, cess and other statutory dues, during the year with the appropriate authorities.
According to the information and explanations given to us, and on the basis of our examination of the books of account, no undisputed amounts payable in respect of Provident Fund, Employees State Insurance, Income-Tax, Sales Tax, Wealth Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess were in arrears, as at 31 March 2016, for a period of more than six months from the date they became payable except income tax liability amounting to Rs. 22.25 lacs.
(b) According to the information and explanations given to us, there are following dues of Income-Tax, Value Added Tax and other material Statutory Dues which have not been deposited with the appropriate authorities on account of any dispute.
S. No. |
Nature of Statutory Dues |
Period to which the amount relates |
Forum where Dispute is pending |
Unpaid Amount (in Rs. Lacs) |
1 |
Income Tax |
AY 2004-2005 |
DCIT, New Delhi |
34.94 |
AY 2005-2006 |
DCIT, New Delhi |
131.34 |
||
2 |
Value Added Tax |
AY 2001-2002 |
AC Appeal, Kolkata |
2.26 |
AY 1994-1995 |
DC Appeal, Noida |
0.54 |
||
AY 1999-2001 |
AC Appeal, Jaipur |
1.52 |
(viii) The Company does not have any loans or borrowings from any financial institution, banks, government or debenture holders during the year. Accordingly, Clause (viii) of the Order is not applicable.
(ix) The Company did not raise any money by way of initial public offer or further public offer (including debt instruments) and term loans during the year. Accordingly, Clause (ix) of the Order is not applicable.
(x) According to the information and explanations given to us, no material fraud by the Company or on the Company by its officers or employees has been noticed or reported during the course of our audit.
(xi) In our opinion and according to the information and explanations given to us, no managerial remuneration has been paid or provided by the Company. Accordingly, Clause (xi) of the Order is not applicable.
(xii) To the best of our knowledge and belief and according to the information and explanations given to us, the
Company is not a Nidhi company. Consequently, Clause (xii) of the Order is not applicable.
(xiii) According to the information and explanations given to us and based on our examination of the records of the Company, transactions with the related parties are in compliance with sections 177 and 188 of the Act where applicable and details of such transactions have been disclosed in the financial statements as required by the applicable accounting standards.
(xiv) According to the information and explanations give to us and based on our examination of the records of the Company, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review; consequently, the requirements of clause (xiv) of the Order are not applicable to the Company.
(xv) To the best of our knowledge and belief and according to the information and explanations given to us, the
Company has not entered into non-cash transactions with directors or persons connected with him. Accordingly, Clause (xv) of the Order is not applicable to the Company.
(xvi) To the best of our knowledge and belief and according to the information and explanations given to us, the Company which is registered under section 45-IA of the Reserve Bank of India Act, 1934. had filed an application with the Reserve Bank of India for de-registration of its NBFC status and accordingly Certificate of Registration (COR) had also been surrendered. Subsequent to the balance sheet date of 31st March 2016, the approval for de-registration of the NBFC Status of the Company has been received vide letter dated 06th May 2016.
ANNEXURE - B TO THE INDEPENDENT AUDITOR''S REPORT OF EVEN DATE ON THE STANDALONE FINANCIAL STATEMENTS OF ESCORTS FINANCE LIMITED
(Referred to in Clause (g), sub para B of Para 7 under the heading of "Report on Other Legal and Regulatory Requirements" of our report of even date)
1. Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We were engaged to audit the internal financial controls over financial reporting of ESCORTS FINANCE LIMITED ("the Company") as at March 31, 2016, in conjunction with our audit of the standalone financial statements of the Company for the period ended on that date.
2. Management''s Responsibility for Internal Financial Controls
The Company''s management is responsible for establishing and maintaining internal financial controls based on the internal control over financial reporting criteria established by the Company, considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Companies Act, 2013.
3. Auditors'' Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit conducted in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing, to the extent applicable to an audit of internal financial controls, both issued by the Institute of Chartered Accountants of India.
Because of the matter described in the Disclaimer of Opinion paragraph below , we were unable to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion on internal financial controls system over financial reporting of the company.
4. Meaning of Internal Financial Controls over Financial Reporting
A company''s internal financial control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company''s internal financial control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company''s assets that could have a material effect on the financial statements.
5. Disclaimer of Opinion
According to information and explanations given to us, the Company has not established its internal financial controls over financial reporting on criteria based on or considering the essential components of internal control stated in the Guidance Note on Audit of Internal Financial Controls over Financial Reporting issued by the Institute of Chartered Accountants of India. Because of this reason, we are unable to obtain sufficient appropriate evidence to provide a basis for our opinion whether the Company had adequate internal financial controls over financial reporting, and whether such internal financial controls were operating effectively as at March 31, 2016.
We have considered the disclaimer reported above in determining the nature, timing, and extent of audit tests applied in our audit of the standalone financial statements of the company and the disclaimer does not affect our opinion on the standalone financial statements of the Company
For N.M.Raiji and Co.
Chartered Accountants
ICAI Firm Registration number: 108296W
Sd/-
CA. S. N. Shivakumar
Place: Faridabad Partner
Date: 30th May, 2016 Membership No. 088113
Mar 31, 2015
We have audited the accompanying standalone financial statements of
Escorts Finance Limited ('the Company1), which comprise the Balance
Sheet as at March 31, 2015, the statement of Profit and Loss and the
Cash Flow Statement for the year then ended and summary of significant
accounting policies and other explanatory information.
2. Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in Section 134(5) of the Companies Act, 2013, ("the Act"), with respect
to the preparation of these standalone financial statements that give a
true and fair view of the financial position, financial performance and
cash flows of the Company, in accordance with the accounting principles
generally accepted in India, including the Accounting Standards
specified under Section 133 of the Act, read with Rule 7 of the
Companies (Accounts) Rules, 2014. This responsibility also includes
maintenance of adequate accounting records in accordance with the
provisions of the Act for safeguarding the assets of the Company and
for preventing and detecting frauds and other irregularities; selection
and application of appropriate accounting policies; making judgments
and estimates that are reasonable and prudent; and design,
implementation and maintenance of adequate internal financial controls,
that were operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the standalone financial statements, that give a true
and fair view and are free from material misstatement, whether due to
fraud or error.
3. Auditor's Responsibility
Our responsibility is to express an opinion on these standalone
financial statements based on our audit.
We have taken into account the provisions of the Act, the accounting
and auditing standards and matters which are required to be included in
the audit report under the provisions of the Act and the Rules made
thereunder.
We conducted out audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the standalone financial
statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the standalone financial statements.
The procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the standalone financial statements,
that give a true and fair view, in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of
expressing an opinion on whether the Company has in place an adequate
internal financial controls system over financial reporting and the
operating effectiveness of such controls. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Company's
Directors, as well as evaluating the overall presentation of the
standalone financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on these
standalone financial statements.
4. Basis of Qualified Opinion
Attention is invited to the following matters in the Notes to the
Standalone Financial Statements:
i. Note No. 21, regarding non-maintenance of investments in Government
Securities as liquid assets in terms of Section 45-IB of Reserve Bank
of India Act, 1934;
ii. Note No. 22, regarding non-maintenance of minimum capital adequacy
ratio required to be maintained in terms of Non-Banking Financial
Companies requirements;
iii. Note No. 24, regarding the Company's credit rating;
iv. Note No. 25, regarding unpaid/unclaimed matured Fixed Deposit
Liability;
v. Note No. 29, regarding non-provision of preference dividend on
cumulative preference shares;
vi. Note No. 30, regarding non-determination of Employee Terminal
Benefits on actuarial basis.
5. Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in sub-paragraphs (iv), (v) and (vi) of Paragraph 4 under the Basis for
Qualified Opinion above, the aforesaid standalone financial statements
give the information required by the Act, in the manner so required,
and give a true and fair view, in conformity with the accounting
principles generally accepted in India, of the state of affairs of the
Company as at March 31, 2015, and its Loss and its cash flows for the
year ended on that date.
6. Other Matters
The Company had filed an application with Reserve Bank of India for
deregistration of its NBFC status and accordingly Certificate of
Registration has been surrendered.
7. Report on Other Legal and Regulatory Requirements
A. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in the terms of sub
section (11) of Section 143 of the Companies Act 2013, we give in the
Annexure a statement on the matters specified in Paragraph 3 & 4 of the
order, to the extent applicable.
B. As required by Section 143(3) of the Act, we report that:
(i) We have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purposes of our audit.
(ii) In our opinion, proper books of account, as required by law, have
been kept by the Company, so far as it appears from our examination of
those books.
(iii) The Balance Sheet, the Statement of Profit & Loss and the Cash
Flow Statement dealt with by this Report, are in agreement with the
books of account.
(iv) Except for the effect of the matters described in sub-paragraphs
(iv), (v) and (vi) of Paragraph 4 under the Basis for Qualified Opinion
above, in our opinion, the aforesaid standalone financial statements
comply with the Accounting Standards specified under Section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(v) On the basis of the written representations received from the
directors as on 31st March, 2015, taken on record by the Board of
Directors, none of the directors is disqualified as on 31st March, 2015
from being appointed as director in terms of Section 164(2) of the Act.
(vi) With respect of the other matters to be included in the Auditor'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 the explanations given to us:
a) The Company has made disclosure regarding pending litigations in its
standalone financial statements, the amount of which is stated to be
presently unascertainable, as referred to in Note No. 20(b) to the
Financial Statements;
b) The Company did not have any long term contracts including
derivative contracts for which there were any material foreseeable
losses;
c) The Company has not deposited amounts to the Investor Education and
Protection Fund against unpaid fixed deposit liabilities including
interest thereon, as referred to in Note No. 25 to the Financial
Statements;
ANNEXURE TO THE INDEPENDENT AUDITORS REPORT
(Referred to in Paragraph 5 (A) of our report of even date)
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of
fixed assets.
(b) The Company has a regular program of physical verification of its
fixed assets by which all fixed assets are verified at reasonable
intervals. In our opinion, the frequency of physical verification is
reasonable having regard to the size of the Company and the nature of
its assets. As informed to us, no material discrepancies were noticed
on such verification.
(ii) In view of the nature of the operations of the Company, the
Company does not hold any inventory other than stock of repossessed
assets, which have been verified by the management during the year.
Provision has been made in respect of discrepancies / diminution in the
value of such stock as at the end of the year end;
(iii) During the year, the Company has not granted loans to bodies
corporate covered in the register maintained under section 189 of the
Companies Act, 2013 (The Act'). Accordingly, paragraph 3(iii)(a) and
(b) of the Order are not applicable to the Company.
(iv) In our opinion and according to the information and explanations
given to us, there are adequate internal control systems, commensurate
with the size of the Company and the limited nature of its business in
relation to fixed assets. Further, on the basis of our examination of
the books and records of the Company, and according to the information
and explanations given to us, we have not observed any major weakness
in the internal control system during the course of the audit.
(v) In respect of deposits accepted from the public, in our opinion and
according to the information and explanation given to us, the
directives issued by Reserve Bank of India and the provisions of
Section 73 to 76 or any other relevant provisions of the Companies Act,
2013, the Company had not complied with the said norms in relation to
repayment of deposit on their respective maturity dates. However, In
accordance with the Hon'ble Delhi High Court's Order / direction dated
March 04, 2011, Escorts Benefit Trust (EBT) created by Escorts Limited,
repaid matured fixed deposit liability against the claims received till
March 03, 2013. Claims received after said dates are also being
entertained and settled after due verification. As at March 31, 2015,
the unpaid/unclaimed matured fixed deposits liability (including
interest thereon) is Rs. 1357.40 lacs (Previous Year Rs. 1606.08 lacs).
(vi) According to the information and explanations given to us, the
Central Government has not prescribed the maintenance of cost records
under sub-section (1) to Section 148 of the Companies Act, 2013, in
respect of any of the activities of the Company.
(vii) (a) According to the information and explanations given to us and
on the basis of our examination of the records of the
Company, amounts deducted/accrued in the books of account in respect of
undisputed statutory dues including Provident Fund, Income-Tax, Service
Tax, Wealth Tax, Value Added Tax, ESIC and other material Statutory
Dues have generally been regularly deposited during the year by the
Company with the appropriate authorities. As explained to us, the
Company did not have any dues on account of Excise duty and Customs
duty.
According to the information and explanations given to us, and on the
basis of our examination of the books of account, no undisputed amounts
payable in respect of Provident Fund, Employees State insurance ,
Income-Tax, Sales Tax,, Wealth Tax, Service Tax, Customs duty, Excise
Duty,Value Added Tax, cess were in arrears, as at 31 March 2015, for a
period of more than six months from the date they became payable except
income tax liability amounting to Rs. 22.25 lacs.
(b) According to the information and explanations given to us, there
are following dues of Income-Tax, Value Added Tax and other material
Statutory Dues which have not been deposited with the appropriate
authorities on account of any dispute.
Sl Nature of Period to Forum where Unpaid
No. Statutory which the dispute is Amount
Dues amount pending (in Rs.
relates Lacs)
1 Income Tax AY 2004-05 DCIT, New Delhi 34.94
AY 2005-06 DCIT, New Delhi 131.34
2 Value Added Tax AY 2001-02 AC Appeal, Kolkata 2.26
AY 1994-95 DC Appeal, Noida 0.54
AY 1999-01 AC Appeal, Jaipur 1.52
(c) The Company has not deposited amounts of Rs. 1357.40 lacs to the
Investor Education & Protection Fund against unpaid fixed deposit
liabilities including interest thereon.
(viii) The Company has accumulated losses at the end of the financial
year and also has incurred losses during the year. The net worth of the
Company continues to stand fully eroded as at the end of the financial
year.
(ix) In our opinion and according to the information and explanation
given to us, the Company has not defaulted in repayment of dues to the
financial institutions or banks. The Company does not have any
outstanding debentures.
(x) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks and financial institutions.
(xi) According to the information and explanations given to us, no term
loan has been obtained by the Company during the year.
(xii) To the best of our knowledge and belief and according to the
information and explanations given to us, no material frauds on or by
the Company was noticed or reported during the year.
For N.M. Raiji & Co.,
Chartered Accountants
Firm Regn. No. 108296W
CA S N Shivakumar
Place: Faridabad Partner
Dated:26th May,2015 M.No.088113
Mar 31, 2014
1. Report on the Financial Statements
We have audited the accompanying financial statements of Escorts
Finance Limited (''the Company''), which comprise the Balance Sheet as at
March 31, 2014, and the Profit and Loss Statement and Cash Flow
Statement for the year ended on that date, and a summary of significant
accounting policies and other explanatory information.
2. Management''s Responsibility for the Financial Statements
Management of the Company is responsible for the preparation of these
financial statements that give a true and fair view of the financial
position, financial performance and cash flow of the Company in
accordance with the Accounting Standards referred to in sub-section
(3C) of section 211 of the Companies Act, 1956 ("the Act"). This
responsibility includes the design, implementation and maintenance of
internal control relevant to the preparation and presentation of the
financial statements that give a true and fair view and are free from
material misstatements, whether due to fraud or error.
3. Auditor''s Responsibility
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those standards require that we comply with
ethical requirement and plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free from material
misstatement. An audit involves performing procedures to obtain audit
evidence about the amount and disclosures in the financial statements.
The procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal control relevant to the
Company''s preparation and fair presentation of the financial statements
in order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and reasonableness of the accounting estimates
made by the management, as well as evaluating the overall presentation
of the financial statements. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our
qualified audit opinion.
4. Basis for Qualified Opinion
Attention is invited to the following Notes to the Financial
Statements:
(i) Note 21, regarding non-maintenance of investments in Government
Securities as liquid assets in terms of Section 45-IB of Reserve Bank
of India Act, 1934;
(ii) Note 22, regarding non-maintenance of minimum Capital Adequacy
Ratio required to be maintained in terms of Non-Banking Financial
Companies requirements;
(iii) Note 24, regarding the Company''s credit rating;
(iv) Note 25, regarding unpaid/unclaimed matured Fixed Deposit
liability;
(v) Note 29, regarding non-provision of preference dividend on
cumulative preference shares;
(vi) Note 30, regarding non-determination of Employees Terminal
Benefits on actuarial basis.
5. Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in paragraph 4(iv), 4(v) and 4(vi) of basis for Qualified Opinion
above, the financial statements give the information required by the
Act in the manner so required and give a true and fair view in
conformity with the accounting principles generally accepted in India:
(i) In the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2014;
(ii) In the case of the Profit & Loss Statement, of the Profit for the
year ended on that date; and
(iii) In the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
6. Other Matters
The Company has filed an application with Reserve Bank of India for
deregistration of its NBFC status and accordingly Certificate of
Registration has been surrendered.
7. Report on Other Legal and Regulatory Requirements
(i) As required by the Companies (Auditor''s Report) order, 2003 issued
by the Central Government of India in terms of sub-section (4A) of
section 227 of the Companies Act, 1956, we enclose in the Annexure a
statement of the matters specified in paragraph 4 and 5 of the said
order.
(ii) Further to our comments in the Annexure referred to in Paragraph
6(i) above, as required by 227(3) of the Act, we report that;
a. We have obtained all the information and explanation which to the
best of our knowledge and belief were necessary for the purpose of our
audit;
b. In our opinion proper books of account as required by law have been
kept by the Company so far as appear from our examination of those
books;
c. The Balance Sheet, Profit and Loss Statement and Cash Flow Statement
dealt with by this report are in agreement with the books of account;
d. Except for the effect of the matter described in paragraph 4(iv),
4(v) and 4(vi) of basis for Qualified Opinion above, in our opinion,
the Balance Sheet, Profit and Loss Statement and Cash Flow Statement
dealt herewith comply with the Accounting Standards referred to in
Section 211(3C) of the Companies Act, 1956;
e. On the basis of the written representations received from the
Directors and taken on records by the Board of Directors, none of the
Director is disqualified, as at the balance sheet date, from being
appointed as Director in terms of section 274(1)(g) of the Companies
Act, 1956;
f. Since the Central Government has not issued any notification as to
the rate at which the cess is to be paid under section 441A of the
Companies Act, 1956 nor has it issued any Rules under the said section,
prescribing the manner in which such cess is to be paid, no cess is due
and payable by the Company.
ANNEXURE TO THE AUDITOR''S REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS
FINANCE LIMITED
1. (a) The Company has maintained its fixed assets register showing
full particulars, including quantitative details and the situation of
its fixed assets;
(b) Fixed assets are physically verified by the management at
reasonable intervals. In our opinion, the frequency of verification of
the fixed assets by the management is reasonable having regard to the
size of the Company and the nature of its assets. There was no material
discrepancies noticed during such verification;
(c) The assets disposed off during the year are not significant and
therefore do not affect the going concern assumption;
2. In view of the nature of the operations of the Company, the Company
does not hold any inventory other than stock of repossessed assets,
which have been verified by the management during the year. Provision
has been made in respect of discrepancies/diminution in the value of
such stock as at the year end;
3. (a) During the year, the Company has not granted any loans, secured
or unsecured, to Companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956. In view of the
above, clause 4(iii) (b), (c) and (d) of the Order are not applicable
to the Company;
(b) During the year, the Company has not taken any loans, secured or
unsecured, from companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956. In view of the
above, clause 4(iii) (f) and (g) of the Order are not applicable to the
Company;
4. In our opinion and according to the information and explanations
provided to us there are adequate internal control procedures
commensurate with the size of the Company and the limited nature of its
business in relation to fixed assets. In our opinion, internal controls
need to be strengthened in relation to other areas.
5. In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered in the register required to be maintained under Section 301 of
Companies Act, 1956. Accordingly clause
(v) (a) of the Order is not applicable to the Company;
6. In respect of deposits accepted, in our opinion and according to the
information and explanation given to us, the directives issued by
Reserve Bank of India and the provisions of Section 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 the Company had
not complied with the said norms in relation to repayment of deposits
on their respective maturity dates. However, In accordance with the
Hon''ble Delhi High Court''s Order/direction dated 4th March 2011,
Escorts Benefit Trust (EBT) created by Escorts Limited, repaid matured
fixed deposit liability against the claims received till 3rd March
2013. Claims received after said date are also being entertained and
settled after due verification. As at 31st March 2014, the
unpaid/unclaimed matured fixed deposits liability (including interest
thereon) is Rs. 1606.08 lacs (Previous Year Rs. 1747.43 lacs).
7. The internal audit system of the Company, in our opinion, needs to
be considerably strengthened;
8. In view of nature of business of the Company, the maintenance of
cost records under clause (d) of sub-section (1) of Section 209 of the
Companies Act, 1956 has not been prescribed by the Central Government;
DCIT
9. (a) According to the records, information and explanations provided
to us, the Company is generally regular in depositing with appropriate
authorities undisputed amount of provident fund, investor education
protection fund, employee''s state insurance, income-tax, sales-tax,
wealth-tax, service tax, customs duty, excise duty, cess and other
statutory dues applicable to it and no undisputed amounts payable were
outstanding as at 31st March, 2014 for a period of more than six months
from the date they became payable except income tax liability amounting
to Rs. 22.25 lacs;
(b) The following are the details of disputed Income Tax and Sales Tax
that have not been paid to the concerned authorities:
Nature of Period to Forum where Unpaid Amount
Statutory which the dispute is (in Rs. Lacs)
Dues amount relates pending
1 Income Tax AY 2004-05 DCIT, New Delhi 34.94
AY 2005-06 DCIT, New Delhi 131.34
2 Sales Tax AY 2001-02 AC Appeal, Kolkata 2.26
AY 1994-95 DC Appeal, Noida 0.54
AY 1999-01 AC Appeal, Jaipur 1.52
10. Although the Company has made profit during the year, it has
accumulated losses as at end of financial year and also has incurred
losses in the immediately preceding financial year. The net worth of
the Company continues to stand fully eroded as at the end of the
financial year;
11. Based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to any financial institution or bank;
12. Based on our examination and according to the information and
explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities;
13. As explained to us, the provisions of any special statute
applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not
applicable to the Company;
14. The Company is not dealing or trading in shares, securities,
debentures and other investments;
15. On the basis of the information and explanations given to us the
Company has not given any guarantee for loans taken by others from bank
or financial institutions;
16. Based on information and explanations given to us by the
management, no term loan has been obtained by the company during the
year;
17. On the basis of our examination of the books of accounts and as per
information and explanations given to us, in our opinion, no funds were
raised by the company on short-term basis during the year;
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under Section 301 of the Act;
19. The Company did not have any outstanding debentures during the
year;
20. The Company has not raised any money by public issues during the
year;
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the Company noticed or reported during the year, nor
have we been informed of such case by the management.
For N.M. Raiji & Co.,
Chartered Accountants
Firm Regn. No. 108296W
S.N. Shivakumar
Place: Faridabad Partner
Dated: 21st May, 2014 M.No. 088113
Mar 31, 2012
1. We have audited the attached Balance Sheet of ESCORTS FINANCE
LIMITED ("the Company"), as at March 31,2012 and also the Profit and
Loss Statement and the Cash Flow Statement for the year ended on that
date annexed thereto. These financial statements are the responsibility
of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the Management, as well as evaluating the overall financial
statement presentation. We believe that our audit provides a reasonable
basis for our opinion.
3. As required by the Companies (Auditors' Report) Order, 2003 as
amended by the Companies (Auditors' Report) (Amendment) Order 2004 (the
Order) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Attention is invited to the following Notes to the Financial
Statements:
(i) Note 22, regarding non-maintenance of investments in Government
Securities as liquid assets in terms of Section 4S-IB of Reserve Bank
of India Act,l 934;
(ii) Note 23, regarding discharge of Fixed Deposit holders liabilities
by Escorts Limited;
(iii) Note 24, regarding non-verification of investment in securities.
(iv) Note 26, regarding non-maintenance of Minimum Capital Adequacy
Ratio required to be maintained in terms of Non-Banking Financial
Companies requirements;
(v) Note 27, regarding the Company's credit rating;
(vi) Note 30, regarding trade and related receivables written off
during the year against which full provision were held.
(vii) Note 31, regarding non-provision of preference dividend on
cumulative preference shares.
(viii) Note 32, regarding non-determination of Employees Terminal
Benefits on actuarial basis.
5. Further to our comments in the Annexure referred to in paragraph 3
to 4 above, we report that:
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit, except for investment referred to in Para 4 (iii) above
(ii) in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
(iii) the Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts;
(iv) in our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956, except where stated otherwise;
(v) on the basis of written representations received from the directors
as on March 31,2012 and taken on record by the Board of Directors, we
report that none of the directors is disqualified, as on March 31,2012
from being appointed as a director under clause(g) of sub-section (1)
of Section 274 of the Companies Act, 1956 and
(vi) subject to our observations in paragraph 4(ii), (iii), (vii) and
(viii) above, in our opinion and to the best of our information and
according to the explanations given to us, the said accounts give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2012,
(b) in the case of the Profit and Loss Statement, of the Loss for the
year ended on that date, and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS' REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS
FINANCE LIMITED
1. (a) The Company has maintained proper records showing full
particulars, including quantitative details and the situation of its
fixed assets;
(b) Fixed assets have been physically verified by the management during
the year. In our opinion, the frequency of verification of the fixed
assets by the management is reasonable having regard to the size of the
Company and the nature of its assets. There was no material
discrepancies noticed during such verification;
(c) The fixed assets disposed off during the year are not significant
and therefore do not affect the Going Concern Assumption;
2. In view of the nature of the operations of the Company, the Company
does not hold any inventory other than stock of repossessed assets,
which have been verified by the management during the year. Provision
has been made in respect of discrepancies/diminution in the value of
such stock as at the year end;
3. (a) During the year, the Company has not granted any loans, secured
or unsecured, to Companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
(b) During the year, the Company has not taken any loans, secured or
unsecured, from companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956.
4. In our opinion and according to the information and explanations
provided to us there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of fixed assets and for sale of
goods/services. In our opinion, internal controls need to be
strengthened In relation to other areas.
5. In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered in the register required to be maintained under Section 301 of
Companies Act, 1956.
6. In respect of deposits accepted, in our opinion and according to
the information and explanation given to us, the directives issued by
Reserve Bank of India and the provisions of Section 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 the Company had
not complied with the said norms in relation to repayment of deposits
on their respective maturity dates. However, the fixed deposit
liability to the extent of Rs. 141.85 crores out of the total liability
of Rs. 162.77 crores has already been discharged by Escorts Limited. As
stated in Note 23 to the Financial Statements, the unpaid
matured/unclaimed fixed deposit liability (including interest there on)
amounting to Rs. 2,091.64 lacs as on 31st March 2012 (Rs. 3,244.69
lacs as on 31st March 2011) shall be met out of funds/assets of
requisite value kept with Escorts Benefit Trust created by Escorts
Limited in terms of direction of the Hon'ble Delhi High Court, issued
while disposing off the Scheme of Compromise and Arrangement filed by
the company along with Escorts Limited before the Hon'ble court vide
which Escorts Limited had undertaken to bail out the fixed deposit
holders and creditors of the Company.
7. The internal audit system of the Company, in our opinion, needs to
be strengthened;
8. In view of nature of business of the Company, the maintenance of
cost records under clause (d) of sub-section (1) of Section 209 of the
Companies Act, 1956 has not been prescribed by the Central Government;
9. (a) According to the records, information and explanations provided
to us, the Company is generally regular in depositing with appropriate
authorities undisputed amount of provident fund, investor education
protection fund, employee's state insurance, income-tax, sales-tax,
wealth-tax, service tax, customs duty, excise duty, cess and other
statutory dues applicable to it and no undisputed amounts payable were
outstanding as at 31st March, 2012 for a period of more than six months
from the date they became payable except in respect of income tax
liability amounting to Rs. 22.25 lacs;
(b) The following are the details of disputed Income Tax and Sales Tax
that have not been paid to the concerned authorities:
Nature of Period to which Forum where Unpaid Amount
Statutory the amount dispute is (in Rs. Lacs)
Dues relates pending
1. Income Tax AY 2004-05 ITAT, New Delhi 34.94
AY 2005-06 ITAT, New Delhi 131.35
2. Sales Tax AY 2001-02 AC Appeal, Kolkata 2.26
AY 1994-95 DC Appeal, Noida 0.54
AY 1999-01 AC Appeal Jaipur 1.52
10. The Company has accumulated losses at the end of the financial
year and also has incurred losses during the year. The net worth of the
Company continues to stand fully eroded as at the end of the financial
year;
11. Based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to any financial institution or bank;
12. Based on our examination and according to the information and
explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities;
13. As explained to us, the provisions of any special statute
applicable to Chit Fund, Nidhi or Mutual Benefit Fund/Societies are not
applicable to the Company;
14. The Company is not dealing or trading in shares, securities,
debentures and other investments. However, investment in share of
Escorts Assets Management Limited has been reinstated during the year
in the books of account (Refer Note 25 to the Financial Statements);
15. On the basis of the information and explanations given to us the
Company has not given any guarantee for loans taken by others from bank
or financial institutions;
16. Based on information and explanations given to us by the
management, no term loan has been obtained by the company during the
year;
17. On the basis of our examination of the books of accounts and as
per information and explanations given to us, in our opinion, no funds
were raised by the company on short-term basis during the year;
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under Section 301 of the Act;
19. The Company did not have any outstanding debentures during the
year;
20. The Company has not raised any money by public issues during the
year;
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the Company noticed or reported during the year, nor
have we been informed of such case by the management.
For N.M. Raiji & Co.,
Chartered Accountants
Firm Regn. No. 108296W
Sd/-
S.N. Shivakumar
Partner
M.No.088113
Place: Faridabad
Dated: 14th July, 2012
Mar 31, 2011
1. We have audited the attached Balance Sheet of Escorts Finance
Limited, as at March 31, 2011 and also the Profit and Loss Account and
the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material mis-statement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Attention is invited to:
(i) Note 3 of Schedule 14 Part B, regarding non-maintenance of
investments in Government Securities as liquid assets in terms of
Section 45-B(1) of Reserve Bank of India Act,1934;
(ii) Note 4 of Schedule 14 Part B, regarding non-verification of
investment in securities.
(iii)Note 5 of Schedule 14 Part B, regarding non-maintenance of
minimum Capital Adequacy Ratio required to be maintained in terms of
Non-Banking Financial Companies requirements;
(iv)Note 6 of Schedule 14 Part B, regarding the Companys credit
rating;
(v) Note 7 of Schedule 14 Part B regarding discharge of Fixed
Deposit holders liabilities by Escorts Limited;
(vi)Note 9 of Schedule 14 Part B regarding existence/working
condition of some of the fixed assets.
(vii) Note 11 of Schedule 14 Part B regarding non-determination of
Employees Terminal Benefits on actuarial basis.
(viii) Note 16 of Schedule 14 Part B regarding pending
reconciliation of advance tax/ provision for tax/TDS recoverable.
5. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i ) we have obtained all the information and explanations, which to
the best of our knowledge and belief were necessary for the purposes of
our audit , except for investment referred to in Para 4 (ii) above
(ii) in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books,
(iii) the Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts,
(iv) in our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956.
(v) on the basis of written representations received from the directors
as on March 31, 2011 and taken on record by the Board of Directors, we
report that none of the directors is disqualified from being a director
in this company. However, the directors of the company are disqualified
from being appointed as a director in other companies in terms of
clause (g) of sub-section (1) of Section 274 of the Companies Act,
1956, and
(vi) subject to our observations in paragraph 4(ii),(v),(vi),(vii) and
(viii) above, in our opinion and to the best of our information and
according to the explanations given to us, the said accounts give the
information required by the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2011,
(b) in the case of the Profit and Loss Account, of the Profit for the
year ended on that date, and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS
FINANCE LIMITED
1. (a) The Company has maintained its fixed assets register showing
full particulars, including quantitative details and the situation of
its fixed assets;
(b) Fixed assets have been physically verified by the management during
the year; Consequent upon such verification, fixed assets aggregating
to Rs 41.67 lacs ( Gross Value Rs. 841.86Lacs. ) have been written off
in the books .
(c) The assets disposed off during the year by the Company amounted to
Rs.308.96 lacs at WDV are material . However, this does not affect the
going concern assumption;
2. In view of the nature of the operations of the Company, the Company
does not hold any inventory other than stock of repossessed assets,
which have been verified by the management during the year. Provision
has been made in respect of discrepancies/ diminution in the value of
such stock as at the year end;
3. (a) During the year, the Company has not granted any loans, secured
or unsecured, to Companies, firms or
parties covered in the register maintained under Section 301 of the
Companies Act, 1956. In view of the above, clause 4(iii) (b), (c) and
(d) of the Order are not applicable to the Company;
(b) During the year, the Company has not taken any loans, secured or
unsecured, from companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956. In view of the
above, clause 4(iii) (f) and (g) of the Order are not applicable to the
Company;
4. In our opinion and according to the information and explanations
provided to us there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of fixed assets and for sale of goods/
services. In our opinion, internal controls need to be strengthened in
relation to other areas.
5. In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered in the register required to be maintained under Section 301 of
Companies Act, 1956. Accordingly clause (v)(a) of the Order is not
applicable to the Company;
6. In respect of deposits accepted, in our opinion and according to
the information and explanation given to us, the directives issued by
Reserve Bank of India and the provisions of Section 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 the Company had
not complied with the said norms in relation to repayment of deposits
on their respective maturity dates. However, as stated in Note 7,
Schedule 14, Part B, the fixed deposit liability to the extent of Rs.
130.32 crores out of the total liability of Rs. 162.77 crores has
already been discharged by Escorts Limited in terms of the Scheme of
Compromise and Arrangement filed before the Honble Delhi High Court.
For the balance liability of Rs. 32.45 crores, funds/assets of adequate
value have been made available by Escorts Limited to a Trust in terms
of the direction of the Honble Delhi High Court at the time of
permitting the withdrawl of the Scheme /petitions. The Company has
transferred the fixed deposit liability in its books of account to the
credit of Escorts Limited to the extent of payments made upto 31st
March,2011.
7. The internal audit system of the Company, in our opinion, needs to
be strengthened;
8. In view of nature of business of the Company, the maintenance of
cost records under clause (d) of sub-section (1) of Section 209 of the
Companies Act, 1956 has not been prescribed by the Central Government;
9. (a) According to the records, information and explanations provided
to us, the Company is generally regular in depositing with appropriate
authorities undisputed amount of provident fund, investor education
protection fund, employees state insurance, income-tax, sales-tax,
wealth-tax, service tax, customs duty, excise duty, cess and other
statutory dues applicable to it and no undisputed amounts payable
were outstanding as at 31st March, 2011 for a period of more than
six months from the date they became payable;
(b) The following are the details of disputed Income Tax and Sales Tax
that have not been paid to the concerned authorities:
Sl Nature of Statutory
No Dues Forum where Dispute
is Pending Unpaid
Amount
(in Rs.Lacs)
1 Income Tax CIT (Appeals) 295.83
2 Sales Tax AC Appeal,
Kolkata 2.26
DC Appeal, Noida 0.54
DC Appeals Jaipur 1.52
10. Although the Company has made profits during the year, it has
accumulated losses as at the end of the financial year and also has
incurred losses in the immediately preceding financial year. The net
worth of the Company continues to stand fully eroded as at the end of
the financial year;
11. Based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to any financial institution or bank;
12. Based on our examination and according to the information and
explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities;
13. As explained to us, the provisions of any special statute
applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are
not applicable to the Company;
14. The Company is not dealing or trading in shares, securities,
debentures and other investments;
15. On the basis of the information and explanations given to us the
Company has not given any guarantee for loans taken by others from bank
or financial institutions;
16. Based on information and explanations given to us by the
management, no term loan has been obtained by the company during the
year;
17. On the basis of our examination of the books of accounts and as
per information and explanations given to us, in our opinion, no funds
were raised by the company on short-term basis during the year;
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under Section 301 of the Act;
19. The Company did not have any outstanding debentures during the
year;
20. The Company has not raised any money by public issues during the
year;
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the Company noticed or reported during the year, nor
have we been informed of such case by the management.
For N.M. Raiji & Co.,
Chartered Accountants
Firm Regn. No. 108296W
S. N. Shivakumar
Partner
M.No. 88113
Place: Faridabad
Date : 4th May, 2011
Mar 31, 2010
1. We have audited the attached Balance Sheet of Escorts Finance
Limited, as at March 31, 2010 and also the Profit and Loss Account and
the Cash Flow Statement for the year ended on that date annexed
thereto. These financial statements are the responsibility of the
Companys management. Our responsibility is to express an opinion on
these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material mis-statement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the Central, Government of India in terms of
sub-section (4A) of section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Attention is invited to:
(i) Note 3b of Schedule 15 Part B, regarding non-maintenance of
investments in Government Securities as liquid assets in terms of
Section 4S-B(1) of Reserve Bank of India Act, 1934;
(ii) Note 4 of Schedule 15 Part B, regarding non-verification of
investment in securities.
(iii) Note 5 of Schedule 15 Part B, regarding non-maintenance of
minimum Capital Adequacy Ratio required to be maintained in terms of
Non-Banking Financial Companies requirements;
(iv) Note 7 of Schedule 15 Part B, regarding the Companys credit
rating;
(v) Note 9 of Schedule 15 Part B regarding non-provision of interest
for overdue period on matured unpaid fixed deposits;
(vi)Note 10 of Schedule 15 Part B regarding existence/ working
condition of some of the fixed assets.
(vii) Note 18 of Schedule 15 Part B regarding reconciliation of advance
tax / provision for tax/ TDS recoverable.
5. Further to our comments in the Annexure referred to in paragraph 3
above, we report that:
(i) we have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit,
(ii) in our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books,
(iii) the Balance Sheet, Profit and Loss Account and Cash Flow
Statement dealt with by this report are in agreement with the books of
accounts,
(iv) in our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of Section 211 of
the Companies Act, 1956.
(v) on the basis of written representations received from the directors
as on March 31, 2010 and taken on record by the Board of Directors, we
report that none of the directors is disqualified from being a Director
in this Company. However, the Directors of the Company are
disqualified from being appointed as a Director in other companies in
terms of Clause (g) of sub-section (1) of Section 274 of the Companies
Act, 1956 and
(vi) subject to our observations in paragraph 4(H), (v), (vi) and (vii)
above, in our opinion and to the best of our information and according
to the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March, 2010,
(b) in the case of the Profit and Loss Account, of the Loss for the
year, ended on that date, and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
ANNEXURE TO THE AUDITORS REPORT OF EVEN DATE TO THE MEMBERS OF ESCORTS
FINANCE LIMITED
1. (a) The Company also needs to update its fixed assets register to
show full particulars, including quantitative details and the situation
of its fixed, assets;
(b) Fixed assets have not been physically verified by the management
during the year;
(c) The assets disposed off during the year were not material and do
not affect the going concern assumption;
2. In view of the nature of the operations of the Company, the Company
does not hold any inventory other than stock of repossessed assets,
which have been verified by the management during the year. Provision
has been made in respect of discrepancies/ diminution in the value of
such stock as at the year end;
3. (a) During the year, the Company has not granted any loans, secured
or unsecured, to Companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956. In view of the
above, clause 4(iii) (b), (c) and (d) of the Order are not applicable
to the Company;
(b) During the year, the Company has not taken any loans, secured or
unsecured, from companies, firms or parties covered in the register
maintained under Section 301 of the Companies Act, 1956. In view of the
above, clause 4(iii) (f) and (g) of the Order are not applicable to the
Company;
4. In our opinion and according to the information and explanations
provided to us there are adequate internal control procedures
commensurate with the size of the Company and the nature of its
business with regard to purchase of fixed assets and for sale of
goods/services. In our opinion, internal controls needs to be
strengthened in relation to other areas.
5. In our opinion and according to the information and explanations
given to us, there are no contracts or arrangements that need to be
entered in the register required to be maintained under Section 301 of
Companies Act, 1956. Accordingly clause (v)(a) of the Order is not
applicable to the Company;
6. In respect of deposits accepted, in our opinion and according to
the information and explanation given to us, the directives issued by
Reserve Bank of India and the provisions of Section 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 the Company has
not complied with the said norms in relation to repayment of deposits
on their respective maturity dates. We are informed by the management
that a scheme of compromise and arrangement has been filed with the
Honble Delhi High Court, where the matter is sub-judice. As per the
interim order of the Court, partial repayments have been made to
certain depositors in hardship cases determined by independent
committee set up by the Court. The Scheme is pending final approval of
the Honble Delhi High Court. No order has been passed by the Company
Law Board or National Company Law Tribunal or Reserve Bank of India or
any Court or any other Tribunal;
7. The internal audit system of the Company, in our opinion, needs to
be strengthened;
8. In view of nature of business of the Company, the maintenance of
cost records under clause (d) of sub- section (1) of Section 209 of the
Companies Act, 1956 has not been prescribed by the Central Government;
9. (a) According to the records, information and explanations provided
to us, the Company is generally regular in depositing with appropriate
authorities undisputed amount of provident fund, investor education
protection fund, employees state insurance, income-tax, sales-tax,
wealth-tax, service tax, customs duty, excise duty, cess and other
statutory dues applicable to it and no undisputed amounts payable were
outstanding as at 31st March, 2010 for a period of more than six months
from the date they became payable;
(b) The following are the details of disputed Income Tax and Sales Tax
that have not been paid to the concerned authorities:
S.
No. Nature of Forum where Dispute
is Pending Unpaid Amount (in
Statutory Dues Rs. Lacs)
1 Income Tax CIT (Appeals) 295.83
2 Sales Tax AC Appeal, Kolkata 2.26
DC Appeal, Noida 0.54
10. The Company has accumulated losses at the end of the financial
year and also has incurred losses during the year. The net worth of the
Company continues to stand fully eroded as at the end of the financial
year;
11. Based on our audit procedures and as per the information and
explanations given by the management, the Company has not defaulted in
repayment of dues to any financial institution or bank;
12. Based on our examination and according to the information and.
explanations given to us, the Company has not granted loans and
advances on the basis of security by way of pledge of shares,
debentures and other securities;
13. As explained to us, the provisions of any special statute
applicable to Chit Fund, Nidhi or Mutual Benefit Fund/ Societies are
not applicable to the Company;
14. The Company is not dealing or trading in shares, securities,
debentures and other investments;
15. On the basis of the information and explanations given to us the
Company has not given any guarantee for loans taken by others from bank
or financial institutions;
16. Based on information and explanations given to us by the
management, no term loan has been obtained by the company during the
financial year;
17. On the basis of our examination of the books of accounts and as
per information and explanations given to us, in our opinion, no fund
were raised by the company on short term basis during the financial
year;
18. During the year, the Company has not made any preferential
allotment of shares to parties and companies covered in the Register
maintained under Section 301 of the Act;
19. The Company did not have any outstanding debentures during the
year;
20. The Company has not raised any money by public issues during the
year;
21. During the course of our examination of the books and records of
the Company, carried out in accordance with the generally accepted
auditing practices in India and according to the information and
explanation given to us, we have neither come across any instance of
fraud on or by the Company noticed or reported during the year, nor
have we been informed of such case by the management.
For N.M. Raiji&Co.
Chartered Accountants
Sd/
S. N. Shivakumar
Place: Faridabad Partner
Date: 11th August, 2010 M.No. 88113
Firm Regn. No. 108296W