Mar 31, 2023
To the Members of Cholamandalam Investment and Finance Company LimitedReport on the Audit of the Standalone financial statementsOpinion
1. We have jointly audited the accompanying standalone financial statements of Cholamandalam Investment and Finance Company Limited ("the Company"), which comprise the Standalone Balance Sheet as at March 31,2023, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Standalone Statement of Changes in Equity and the Standalone Cash Flow Statement for the year then ended, and notes forming part of the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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, 2023, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its standalone cash flows for the year then ended.
3. We conducted our joint audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditor''s Responsibilities for the Audit of the standalone Financial Statements" section of our 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 ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matter |
How our audit addressed the key audit matter |
Assessment of impairment loss allowance based on expected credit loss (ECL) on Loans (Refer Note 9 of the standalone financial statements) |
The audit procedures performed by us to assess appropriateness of the impairment allowance based on ECL on loans included the following: ⢠We understood and evaluated the design and tested the operating effectiveness of the key controls put in place by the management over: i. the assumptions used in the calculation of ECL and its various aspects such as determination of Probability of Default, Loss Given Default, Exposure at Default, Staging of Loans, etc.; ii. the completeness and accuracy of source data used by the Management in the ECL computation; and iii. ECL computations for their reasonableness. ⢠We, along with the assistance of the auditor''s expert, verified the appropriateness of methodology and models used by the Company and reasonableness of the assumptions used within the computation process to estimate the impairment provision. |
The loan balances towards vehicle finance, home loans, loans against property, and other loans aggregating to '' 107,077.24 crores and the associated impairment allowances aggregating to '' 2,328.92 crores are significant to the standalone financial statements and involves judgement around the determination of the impairment allowance in line with the requirements of the Ind AS 109 "Financial Instruments". Impairment allowances represent management''s estimate of the losses incurred within the loan portfolios at the balance sheet date and are inherently judgmental. Impairment, based on ECL model, is calculated |
Key audit matter |
How our audit addressed the key audit matter |
using main variables, viz. ''Staging'', ''Exposure at Default'', ''Probability of Default'' and ''Loss Given Default'' as specified under Ind AS 109. Quantitative factors like days past due, behaviour of the portfolio, historical losses incurred on defaults and macro-economic data points identified by the Management''s expert and qualitative factors like nature of the underlying loan, deterioration in credit quality, correlation of macro- economic variables to determine expected losses, uncertainty over realisability of security, judgement in relation to management overlays and related Reserve Bank of India (RBI) guidelines, to the extent applicable, etc. have been taken into account in the ECL computation. Given the inherent judgmental nature and the complexity of model involved, we determined this to be a Key Audit Matter. |
⢠We test-checked the completeness and accuracy of source data used. ⢠We recomputed the impairment provision for a sample of loans across the loan portfolio to verify the arithmetical accuracy and compliance with the requirements of Ind AS 109. ⢠We evaluated the reasonableness of the judgement involved in management overlays that form part of the impairment provision, and the related approvals. ⢠We evaluated the adequacy of presentation and disclosures in relation to impairment loss allowance in the standalone financial statements. |
Assessment of Direct tax and Indirect tax litigations and related disclosure of contingent liabilities (Refer to Note 38(a) of the standalone financial statements) As at March 31, 2023, the Company has exposure towards litigations relating to various tax matters as set out in the aforesaid Notes. Significant management judgement is required to assess matters relating to direct tax and indirect tax litigations, to determine the probability of occurrence of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. The management judgement is also supported with legal advice in certain cases as considered appropriate. As the ultimate outcome of the matters are uncertain and the positions taken by the management are based on the application of their best judgement, related legal advice including those relating to interpretation of laws/regulations, it is considered to be a Key Audit Matter. |
Our audit procedures included the following: ⢠We understood, assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to direct and indirect tax laws and regulations. ⢠We inquired with management the recent developments and the status of the material litigations which were reviewed and noted by the Audit Committee. ⢠We performed our assessment on a test check basis on the underlying calculations supporting the contingent liabilities related to litigations disclosed in the standalone financial statements. ⢠We used auditor''s expert to gain an understanding and to evaluate the disputed tax matters. ⢠We considered external legal opinions, where relevant, obtained by management and examined by the auditor''s expert. ⢠We obtained the listings from the management and got it reconfirmed from management''s consultants. ⢠We evaluated the adequacy of presentation and disclosures in relation to litigations in the standalone financial statements. |
Audit in an Information Technology (IT) enabled environment - including considerations on exceptions identified in IT Environment The IT environment of the entity involves a few independent and inter-dependent IT systems used in the operations of the entity for processing and recording of the business transactions. As a result, there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the entity. |
Our audit procedures with respect to this matter included the following: In assessing the controls over the IT systems, we have involved our Technology Assurance specialists to obtain an understanding of the IT environment, IT infrastructure and IT systems. With respect to the "In-scope IT systems" identified as relevant to the audit of the standalone financial statements and financial reporting process of the entity, we have evaluated and tested relevant IT general controls or relied upon service auditor''s report, where applicable. |
Key audit matter |
How our audit addressed the key audit matter |
Appropriate IT general controls and IT application controls are required to ensure that such IT systems can process the data as required, completely, accurately, and consistently for reliable financial reporting. We have identified certain key IT applications and the related IT infrastructure (herein after referred to as "In-scope IT systems"), which have an impact on the financial reporting process and the related controls as a key audit matter because of the increased level of automation; a few systems being used by the entity for processing financial transactions; and the complexity of the IT architecture; and its impact on the financial records and financial reporting process of the entity. |
On such "In-scope IT systems", we have covered the key IT general controls with respect to the following domains: ⢠Program change management, which includes that program changes are moved to the production environment as per defined procedures and relevant segregation of environment is ensured. ⢠User access management, which includes user access provisioning, de-provisioning, access review, password management, sensitive access rights and segregation of duties to ensure that privileged access to applications, operating system and databases in the production environment were granted only to authorized personnel. ⢠Other areas that were assessed under the IT control environment included backup management, business continuity and disaster recovery, incident management, batch processing and monitoring. We have also evaluated the design and tested the operating effectiveness of key IT application controls within key business processes, which included testing automated calculations, automated accounting procedures, system interfaces, system reconciliation controls and key system generated reports, as applicable. Where control deficiencies have been identified, we have tested compensating controls or performed alternative audit procedures, where necessary. |
5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report (Financial Highlights, Board''s Report, Management Discussion and Analysis and Report on Corporate Governance) but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements, or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the standalone financial statements
6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Act with respect to the preparation of these standalone financial statements that give a true and fair view of the standalone financial position, standalone financial performance, changes in equity and standalone 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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
7. In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
Auditor''s responsibilities for the audit of the standalone financial statements
8. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
9. As part of an audit in accordance with SAs, we exercise professional judgement and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
10. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
11. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
12. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on other legal and regulatory requirements
13. As required by the Companies (Auditor''s Report) Order, 2020 ("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 B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
14. 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) I n 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 Standalone Balance Sheet, the Standalone Statement of Profit and Loss (including other comprehensive income), the Standalone Statement of Changes in Equity and the Standalone Cash Flow Statement dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31,2023, taken on record by the Board of Directors, none of the directors are disqualified as on March 31,2023, from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".
(g) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 38(a) to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 7 and 9 to the standalone financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the
accounts, no funds have been advanced or loaned or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 50A - Part - II - Other disclosures to the standalone financial statements);
(b) The management has represented that, to the best of its knowledge and belief, as disclosed in the notes to the accounts, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 50A - Part - II - Other disclosures to the standalone financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
vi. As proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 (as amended), which provides for books of account to have the feature of audit trail, edit log and related matters in the accounting software used by the Company, is applicable to the Company only with effect from financial year beginning April 1, 2023, the reporting under clause (g) of Rule 11 of the Companies (Audit and Auditors) Rules, 2014 (as amended), is currently not applicable.
15. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions
of Section 197 read with Schedule V to the Act.
For Sundaram and Srinivasan For Price Waterhouse LLP
Firm Registration Number: 004207S Firm Registration Number: 301112E/E300264
Chartered Accountants Chartered Accountants
S. Usha A. J. Shaikh
Partner Partner
Membership No. : 211785 Membership No. : 203637
UDIN : 23211785BGWCVI4300 UDIN : 23203637BGXOYJ3321
Place : Chennai Place : Chennai
Date : May 3, 2023 Date : May 3, 2023
Mar 31, 2022
Report on the Audit of the Standalone financial statements
1 We have audited the accompanying standalone financial statements of Cholamandalam Investment and Finance Company Limited ("the Company"), which comprise the Standalone Balance Sheet as at March 31, 2022, and the Standalone Statement of Profit and Loss (including Other Comprehensive Income), the Statement of Changes in Equity and the Standalone Cash Flow Statement for the year then ended, and notes to the standalone financial statements, including a summary of significant accounting policies and other explanatory information.
2. In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Companies Act, 2013 ("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, 2022, and total comprehensive income (comprising of profit and other comprehensive income), changes in equity and its cash flows for the year then ended.
3. We conducted our audit in accordance with the Standards on Auditing (SAs) specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the "Auditor''s Responsibilities for the Audit of the Standalone financial statements" section of our 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 ethical requirements that are relevant to our audit of the standalone financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
4. Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements of the current period. These matters were addressed in the context of our audit of the standalone financial statements as a whole and in forming our opinion thereon, and we do not provide a separate opinion on these matters.
Key audit matters |
How our audit addressed the key audit matter |
Assessment of impairment loss allowance based on expected credit loss (ECL) on Loans (Refer Note 9 of the standalone financial statements) The loan balances towards vehicle finance, home loans, loans against property, and other loans aggregating to INR 76,47,789 lakhs and the associated impairment allowances aggregating to INR 2,32,868 lakhs are significant to the standalone financial statements and involves judgement around the determination of the impairment allowance in line with the requirements of the Ind AS 109 "Financial Instruments". Impairment allowances represent management''s estimate of the losses incurred within the loan portfolios at the balance sheet date and are inherently judgmental. Impairment, based on ECL model, is calculated using main variables, viz. ''Staging, ''Exposure At Default, ''Probability of Default'' and ''Loss Given Default'' as specified under Ind AS 109. |
The audit procedures performed by us to assess appropriateness of the impairment allowance based on ECL on loans included the following: ⢠We understood and evaluated the design and tested the operating effectiveness of the key controls put in place by the management over: i. the assumptions used in the calculation of ECL and its various aspects such as determination of Probability of Default, Loss Given Default, Exposure At Default, Staging of Loans, etc.; ii. the completeness and accuracy of source data used by the Management in the ECL computation; and iii. ECL computations for their reasonableness. ⢠We, along with the assistance of the auditor''s our expert, verified the appropriateness of methodology and models used by the Company and reasonableness of the assumptions used within the computation process to estimate the impairment provision. |
Key audit matters |
How our audit addressed the key audit matter |
Quantitative factors like days past due, behaviour of the portfolio, historical losses incurred on defaults and macro-economic data points identified by the Management''s expert and qualitative factors like nature of the underlying loan, deterioration in credit quality, correlation of macro- economic variables to determine expected losses, uncertainty over realisability of security, judgement in relation to management overlays and related Reserve Bank of India (RBI) guidelines, to the extent applicable, etc. have been taken into account in the ECL computation. Given the inherent judgmental nature and the complexity of model involved, we determined this to be a Key Audit Matter. |
⢠We test-checked the completeness and accuracy of source data used. ⢠We recomputed the impairment provision for a sample of loans across the loan portfolio to verify the arithmetical accuracy and compliance with the requirements of Ind AS 109. ⢠We evaluated the reasonableness of the judgement involved in management overlays that form part of the impairment provision, and the related approvals. We evaluated the adequacy of presentation and disclosures in relation to impairment loss allowance in the Standalone Financial Statements. |
Assessment of Direct tax and Indirect tax litigations and related disclosure of contingent liabilities (Refer to Note 38 (a) of the Standalone Financial Statements) As at March 31, 2022, the Company has exposure towards litigations relating to various tax matters as set out in the aforesaid Notes. Significant management judgement is required to assess matters relating to direct tax and indirect tax litigations, to determine the probability of occurrence of material outflow of economic resources and whether a provision should be recognised or a disclosure should be made. The management judgement is also supported with legal advice in certain cases as considered appropriate. As the ultimate outcome of the matters are uncertain and the positions taken by the management are based on the application of their best judgement, related legal advice including those relating to interpretation of laws/regulations, it is considered to be a Key Audit Matter. |
Our audit procedures included the following: ⢠We understood, assessed and tested the design and operating effectiveness of key controls surrounding assessment of litigations relating to direct and indirect tax laws and regulations ; ⢠We inquired with management the recent developments and the status of the material litigations which were reviewed and noted by the Audit Committee; ⢠We performed our assessment on a test check basis on the underlying calculations supporting the contingent liabilities related to litigations disclosed in the Standalone Financial Statements; ⢠We used auditor''s expert to gain an understanding and to evaluate the disputed tax matters; ⢠We considered external legal opinions, where relevant, obtained by management and examined by the auditor''s expert; ⢠We obtained the listings from the management and got it reconfirmed from management''s consultants; ⢠We evaluated the adequacy of presentation and disclosures in relation to litigations in the Standalone Financial Statements. |
Audit in an Information Technology (IT) enabled environment - including considerations on exceptions identified in IT Environment The IT environment of the entity involves a few independent and inter- dependent IT systems used in the operations of the entity for processing and recording of the business transactions. As a result, there is a high degree of reliance and dependency on such IT systems for the financial reporting process of the entity. Appropriate IT general controls and IT application controls are required to ensure that such IT systems can process the data as required, completely, accurately, and consistently for reliable financial reporting. We have identified certain key IT applications and the related IT infrastructure (herein after referred to as "In-scope IT systems"), which have an impact on the financial reporting process and the |
Our audit procedures with respect to this matter included the following: In assessing the controls over the IT systems, we have involved our Technology Assurance specialists to obtain an understanding of the IT environment, IT infrastructure and IT systems. With respect to the "In-scope IT systems" identified as relevant to the audit of the financial statements and financial reporting process of the entity, we have evaluated and tested relevant IT general controls or relied upon service auditor''s report, where applicable. On such "In-scope IT systems", we have covered the key IT general controls with respect to the following domains: ⢠Program change management, which includes that program changes are moved to the production environment as per defined procedures and relevant segregation of environment is ensured. |
Key audit matters |
How our audit addressed the key audit matter |
related controls as a key audit matter because of the increased level of automation; a few systems being used by the entity for processing financial transactions; and the complexity of the IT architecture; and its impact on the financial records and financial reporting process of the entity. |
⢠User access management, which includes user access provisioning, de- provisioning, access review, password management, sensitive access rights and segregation of duties to ensure that privileged access to applications, operating system and databases in the production environment were granted only to authorized personnel. ⢠Other areas that were assessed under the IT control environment included backup management, business continuity and disaster recovery, incident management, batch processing and monitoring. We have also evaluated the design and tested the operating effectiveness of key IT application controls within key business processes, which included testing automated calculations, automated accounting procedures, system interfaces, system reconciliation controls and key system generated reports, as applicable. Where control deficiencies have been identified, we have tested compensating controls or performed alternative audit procedures, where necessary. |
5. The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual Report (Financial Highlights, Board''s report, Management Discussion and Analysis and Report on Corporate Governance), but does not include the standalone financial statements and our auditor''s report thereon.
Our opinion on the standalone financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the standalone financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of management and those charged with governance for the standalone financial statements
6. The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of 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, changes in equity 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. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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.
7. In preparing the standalone financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial reporting process.
8. Our objectives are to obtain reasonable assurance about whether the standalone financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these standalone financial statements.
9. As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the standalone financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under Section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the company has adequate internal financial controls with reference to standalone financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the standalone 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the standalone financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
10. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
11. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
12. From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the standalone financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Other Matter
13. The standalone financial statements of the Company for the year ended March 31,2021, were audited by another firm of chartered accountants under the Companies Act, 1956/ Act who, vide their report dated May 07, 2021, expressed an unmodified opinion on those standalone financial statements.
Our opinion is not modified in respect of above matter.
Report on other legal and regulatory requirements
14. As required by the Companies (Auditor''s Report) Order, 2020 ("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 B a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
15. 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 (including other comprehensive income), the Statement of Changes in Equity and the Statement of Cash Flows dealt with by this Report are in agreement with the books of account.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act.
(e) On the basis of the written representations received from the directors as on March 31, 2022 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2022 from being appointed as a director in terms of Section 164(2) of the Act.
(f) With respect to the adequacy of the internal financial controls with reference to standalone financial statements of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure A".
(g) 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 (as amended), in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements - Refer Note 38(a) to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 7 and Note 9 to the standalone financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company during the year.
iv. (a) The management has represented that, to the best of its knowledge and belief, no funds have been advanced or loaned
or invested (either from borrowed funds or share premium or any other sources or kind of funds) by the Company to or in any other person(s) or entity(ies), including foreign entities ("Intermediaries"), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 50A Part II - Other Disclosures to the standalone financial statements);
(b) The management has represented that, to the best of its knowledge and belief, no funds have been received by the Company from any person(s) or entity(ies), including foreign entities ("Funding Parties"), with the understanding, whether recorded in writing or otherwise, that the Company shall, whether, directly or indirectly, lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Funding Party ("Ultimate Beneficiaries") or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries (Refer Note 50A Part II - Other Disclosures to the standalone financial statements); and
(c) Based on such audit procedures that we considered reasonable and appropriate in the circumstances, nothing has come to our notice that has caused us to believe that the representations under sub-clause (a) and (b) contain any material misstatement.
v. The dividend declared and paid during the year by the Company is in compliance with Section 123 of the Act.
16. The Company has paid/ provided for managerial remuneration in accordance with the requisite approvals mandated by the provisions
of Section 197 read with Schedule V to the Act.
For Sundaram and Srinivasan For Price Waterhouse LLP
Chartered Accountants Chartered Accountants
Firm Registration No. : 004207S Firm Registration No. : 301112E /E300264
S. Usha A. J. Shaikh
Partner Partner
Membership No. : 211785 Membership No. : 203637
UDIN : 22211785AIKTFO9980 UDIN : 22203637AIKXQO1770
Place : Chennai Place : Chennai
Date : May 5, 2022 Date : May 5, 2022
Mar 31, 2021
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying Standalone Ind AS financial statements of Cholamandalam Investment and Finance Company Limited ("the Company"), which comprise the Balance sheet as at March 31 2021, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Ind AS financial statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us the aforesaid Standalone Ind AS financial statements give the information required by the Companies Act, 2013, as amended ("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 31,2021, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
We conducted our audit of the Standalone Ind AS financial statements in accordance with the Standards on Auditing (SAs), as specified under section 143(10) of the Act. Our responsibilities under those Standards are further described in the ''Auditor''s Responsibilities for the Audit of the Standalone Ind AS Financial Statements'' section of our 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 ethical requirements that are relevant to our audit of the financial statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS financial statements.
We draw attention to Note 2.2 of the Standalone Ind AS financial statements, which describes the impact of COVID-19 pandemic, and its possible consequential implications on the Company''s operations and financial metrics, including the Company''s estimates of impairment of loans and that such estimates may be affected by the severity and duration of the pandemic. Our opinion is not modified in respect of this matter.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS financial statements for the financial year ended March 31, 2021. These matters were addressed in the context of our audit of the Standalone Ind AS financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description 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 be communicated in our report. We have fulfilled the responsibilities described in the Auditor''s responsibilities for the audit of the Standalone Ind AS financial statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Ind AS financial statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Ind AS financial statements.
Key audit matters How our audit addressed the key audit matter Impairment of Financial Assets based on Expected Credit Loss (''ECL'') (as described in Note 3.5 of the Standalone Ind AS Financial Statements) |
|
As at March 31, 2021, the Company has made a provision for impairment loss aggregating '' 2,44,441 Lakhs against the loans outstanding. Due to the significance of the judgments used in both classification of loans into various stages as well as the computation of expected credit losses on such financial assets as per Ind AS 109, this has been considered as a key audit matter. |
⢠R ead and assessed the Company''s impairment provision policy and their compliance with Ind AS 109 and the governance framework approved by the Board of Directors pursuant to Reserve Bank of India guidelines issued on 13 March 2020. |
Key audit matters |
How our audit addressed the key audit matter |
Financial instruments, which include loans to customers, |
⢠Read and assessed the Company''s policy with respect to |
represent a significant portion of the total assets of the Company. |
moratorium and one-time restructuring pursuant to the RBI |
The Company has loans aggregating '' 68,28,375 lakhs as at March |
circular and tested the implementation of such policy on a |
31,2021. |
sample basis. ⢠Understood the Company''s key credit processes comprising |
Estimates regarding the impairment provision against loans |
granting, recording and monitoring of loans as well as |
are based on the expected credit loss model developed by the |
impairment provisioning. |
Company based on the guiding principles prescribed under Ind |
⢠Read and assessed the Company''s impairment provisioning |
AS 109. As stated, in the notes to the financial statements for the |
policy as per Ind AS 109; |
year ended March 31, 2021, the impairment provision is based |
⢠Obtained an understanding of the Company''s Expected Credit |
on the expected credit loss model requires the management of |
Loss (''ECL'') methodology, the underlying assumptions and |
the Company to make significant judgments in connection with |
performed sample tests to assess the staging of outstanding |
related computation. These include: |
exposures; |
(a) Segmentation of the loan portfolio into homogenous pool of |
⢠Tested the ECL model, including assumptions and underlying |
borrowers; |
computation. ⢠Assessed the Exposure at Default used in the impairment |
(b) Identification of exposures where there is a significant increase |
calculations on a test basis; |
in credit risk and those that are credit impaired; |
⢠Obtained an understanding of the basis and methodology |
(c) Determination of the 12 month and life-time probability of |
adopted by management to determine 12 month and life-time |
default for each of the segments identified; and |
probability of defaults for various homogenous segments and performed test checks; |
(d) Loss given default for various exposures based on past trends |
⢠Obtained an understanding of the basis and methodology |
/ experience, management estimates etc., |
adopted by management to determine Loss Given Defaults |
Additionally, the economic and business consequences of the |
for various homogenous segments based on past recovery |
COVID 19 pandemic as described in Note 2.2 to the Standalone |
experience, qualitative factors etc., and performed test checks; |
Ind AS financial statements, slowdown of economic activity, |
⢠Assessed the items of loans, credit related contingent items as |
moratoriums granted to borrowers, the related regulatory directives and also the applicable accounting directions, further |
at the reporting date which are considered in the impairment computation as at the reporting date; |
affect provisioning under the ECL approach. |
⢠Assessed and tested the inputs used in the impairment computation (including the data integrity of information |
Note 3.5 to the Standalone Ind AS Financial Statements explains |
extracted from the Company''s IT systems); |
the various matters that the management has considered for |
⢠Enquired with the management regarding significant |
developing this expected credit loss model. |
judgments and estimates involved in the impairment computation and additional management overlay provision arising from the effects of the COVID-19 pandemic, and evaluated the reasonableness thereof; ⢠Performed analytical reviews of disaggregated data to observe any unusual trends warranting additional audit procedures; and ⢠Read the financial statement disclosures in respect of impairment losses on financial assets, including the specific disclosures made with regard to the impact of COVID-19 on the ECL estimation. |
Audit in an Information Technology (IT) enabled environment - including considerations on exceptions identified in IT environment |
|
The Company has information technology applications which are used across various class of transactions in its operations including automated and IT dependent manual controls that are embedded in them. |
In assessing the reliability of electronic data processing, we involved our specialized IT auditors in our audit team. Our audit procedures focused on the IT infrastructure and applications relevant to financial reporting: |
Key audit matters |
How our audit addressed the key audit matter |
Due to the pervasive nature and complexity of the Company''s IT environment, we place significant emphasis on the information systems, the controls, and process around such information systems and the usage of information from such systems for the purpose of financial reporting by the management for our audit. Accordingly, this has been considered as a key audit matter. |
⢠Assessing the information systems and the applications that is available in the Company in two phases: (i) IT General Controls and (ii) Application level embedded controls; ⢠The aspects covered in the IT systems General Control audit were (i) User Access Management (ii) Change Management (iii) Other related ITGCs; - to understand the design and the operating effectiveness of such controls in the system; ⢠Understanding of the changes that were made to the IT landscape during the audit period and assessing changes that have impact on financial reporting; ⢠Performed tests of controls (including over compensatory controls wherever applicable) on the IT Application controls and IT dependent manual controls in the system. ⢠Wherever applicable, we also assessed through direct sample tests, the information produced from these systems which were relied upon for our audit. |
Pending litigations with tax authorities (as described in Note 38(a) of the Standalone Ind /AS Financial Statements) |
|
The Company operates in a complex tax environment and is |
In assessing the exposure of the Company for the tax litigations, |
required to discharge direct and indirect tax obligations under |
we have performed the following procedures: |
various legislations such as Income Tax Act, 1961, the Finance Act, |
⢠Obtained an understanding of the process laid down by the |
1994 Goods and Services Tax Acts and VAT Acts of various states, |
management for performing their assessment taking into |
as may be applicable. |
consideration past legal precedents, changes in laws and |
The tax authorities under these legislations have raised certain |
regulations, expert opinions obtained from external tax / legal |
tax demands on the Company in respect of the past periods. The |
experts (as applicable); |
Company has disputed such demands and has appealed against |
⢠Assessed the processes and entity level controls established |
them at appropriate forums. As at March 31, 2021 the Company |
by the Company to ensure completeness of information with |
has an amount of '' 66,928 Lakhs pertaining to various pending |
respect to tax litigations; |
tax litigations. Ind AS 37 requires the Company to perform an assessment of the |
⢠Along with our tax experts, we undertook the following procedures: |
probability of economic outflow on account of such disputed tax |
⢠Reading communications with relevant tax authorities |
matters and determine whether any particular obligation needs |
including notices, demands, orders, etc., relevant to |
to be recorded as a provision in the books of account or to be disclosed as a contingent liability. Considering the significant |
the pending litigations, as made available to us by the management; |
degree of judgement applied by the management in making such |
⢠Testing the accuracy of disputed amounts from the |
assessments and the resultant impact on the financial statements, |
underlying communications received from tax authorities |
we have considered it to be a key audit matter. |
and responses filed by the Company; ⢠Considered the submissions made to appellate authorities and expert opinions obtained by the Company from external tax / legal experts (wherever applicable) which form the basis for management''s assessment; ⢠Assessed the positions taken by the management in the light of the aforesaid information and based on the examination of the matters by our tax experts. Read the disclosures included in the Standalone Ind AS Financial Statements in this regard. |
The Company''s Board of Directors is responsible for the other information. The other information comprises the information included in the Annual report, but does not include the Standalone Ind AS financial statements and our auditor''s report thereon
Our opinion on the Standalone Ind AS financial statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS financial statements, our responsibility is to read the other information and, in doing so, consider whether such other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management for the Standalone Ind AS Financial Statements
The Company''s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS financial statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the 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 Ind AS financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Ind AS financial statements, management is responsible for assessing the Company''s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so. Those Board of Directors are also responsible for overseeing the Company''s financial 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 AS financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor''s report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Ind AS financial statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
⢠Identify and assess the risks of material misstatement of the Standalone Ind AS financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
⢠Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls with reference to financial statements in place and the operating effectiveness of such controls.
⢠Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
⢠Conclude on the appropriateness of management''s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company''s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor''s report to the related disclosures in the 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''s report. However, future events or conditions may cause the Company to cease to continue as a going concern.
⢠Evaluate the overall presentation, structure and content of the Standalone Ind AS financial statements, including the disclosures, and whether the Standalone Ind AS financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind AS financial statements for the financial year ended March 31,2021 and are therefore the key audit matters. We describe these matters in our auditor''s report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits 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 of the Act, we give in the "Annexure 1" a statement on the matters specified in paragraphs 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Standalone Ind AS financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2021 taken on record by the Board of Directors, none of the directors is disqualified as on March 31,2021 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls with reference to Standalone Ind AS financial statements and 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 March 31,2021 has been paid / provided by the Company to its directors in accordance with the provisions of section 197 read with Schedule V to the Act;
(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, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS financial statements - Refer Note 38(a) to the Standalone Ind AS financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 7 and 9 to the Standalone Ind AS financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Aravind K
Partner
Membership Number: 221268 UDIN: 21221268AAAACQ3684 Place of Signature: Chennai Date: May 7, 2021
Mar 31, 2019
Report on the Audit of the Standalone Ind AS Financial Statements Opinion
We have audited the accompanying Standalone Ind AS Financial Statements of Cholamandalam Investment and Finance Company Limited (âthe Companyâ), which comprise the Balance sheet as at March 31, 2019, the Statement of Profit and Loss, including the statement of Other Comprehensive Income, the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and notes to the Standalone Ind AS Financial Statements, including a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid Standalone Ind AS Financial Statements give the information required by the Companies Act, 2013 (âthe Actâ) 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, 2019, its profit including other comprehensive income its cash flows and the changes in equity for the year ended on that date.
Basis for Opinion
We conducted our audit of the Standalone Ind AS Financial Statements in accordance with the Standards on Auditing (-SAs-), as specified under Section 143(10) of the Act. Our responsibilities under those Standards are further described in the -Auditorâs Responsibilities for the Audit of the Standalone Ind AS Financial Statements- section of our 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 ethical requirements that are relevant to our audit of the Standalone Ind AS Financial Statements under the provisions of the Act and the Rules thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the Code of Ethics. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the Standalone Ind AS Financial Statements.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2019. These matters were addressed in the context of our audit of the Standalone Ind AS Financial Statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. For each matter below, our description 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 be communicated in our report. We have fulfilled the responsibilities described in the Auditorâs responsibilities for the audit of the Standalone Ind AS Financial Statements section of our report, including in relation to these matters. Accordingly, our audit included the performance of procedures designed to respond to our assessment of the risks of material misstatement of the Standalone Ind AS Financial Statements. The results of our audit procedures, including the procedures performed to address the matters below, provide the basis for our audit opinion on the accompanying Standalone Ind AS Financial Statements.
Key audit matters How our audit addressed the key audit matter Change in financial reporting framework - First time adoption of Indian Accounting Standards (-Ind AS-) (as described in Note 2 of the Standalone Ind /4S Financial Statements) |
|
In accordance with the roadmap for implementation of Ind AS for non-banking financial companies, as announced by the Ministry of Corporate Affairs, the Company has adopted Ind AS from April 1, 2018 with an effective date of April 1, 2017 for such transition. For periods up to and including the year ended March 31, 2018, the Company had prepared and presented its financial statements in accordance with the erstwhile generally accepted accounting principles in India (Previous GAAP). In order to give effect of the transition to Ind AS these financial statements for the year ended March 31, 2019, together with the comparative financial information for the previous year ended March 31, 2018 and the transition date balance sheet as at April 1, 2017 have been prepared under Ind AS. |
Our audit procedures with regard to the 1st time adoption of Ind AS included assessing the judgements applied by the Management in this regard: - Reading the Ind AS impact assessment performed by the management to identify areas which were impacted on account of Ind AS transition; - Understanding the financial statement closure process and the controls established by the Company for transition to Ind AS; - Reading and assessing the changes made to the accounting policies due to the requirements of the new financial reporting framework; |
Key audit matters |
How our audit addressed the key audit matter |
The transition to Ind AS has involved changes in the Company-s |
- Assessing the judgements exercised by the management in |
policies and processes relating to financial reporting. Further, |
applying the first-time adoption principles of Ind AS 101 as at |
the management has also exercised judgement (wherever |
transition date; |
applicable) in giving effect to various principles of Ind AS in its |
- Testing accounting adjustments posted as at the transition |
first-time adoption. In view of the complexity and the resultant |
date, and in respect of the previous year to convert the |
risk of a material misstatement arising from an error or omission |
financial information reported under erstwhile Indian GAAP to |
in correctly implementing the principles of Ind AS at the transition |
Ind AS; |
date, which could result in a misstatement of one or more periods |
|
presented in these Ind AS financials statements, this has been an |
- Assessing the disclosures included in the Standalone Ind AS |
area of significance in our audit. |
Financial Statements in accordance with the requirements |
Some of the key adjustments made to the financial statements on |
of Ind AS (including with respect to the previous periods |
first-time adoption of Ind AS for the year ended March 31, 2019 |
presented). |
are as follows: |
Procedures in connection with Sl. No. 1: |
1. The Company earns certain interest income and incurs certain |
Our audit response included (as applicable in each case): |
expenses which are directly attributable to the origination of |
- Assessing the items which has been considered as part of |
loans disbursed by the Company. Under Ind AS, the accounting |
effective interest rate as well as the related computation on a |
for these upfront charges and interest income are based on |
test basis; and |
the effective interest rate method for loans which is based on the loan cashflows. |
- Assessing the related IT system and manual controls |
2. Under the Previous GAAP, the identification of delinquent accounts and consequent provisions for loan losses were |
implemented for effective interest rate accounting. Procedures on the matter discussed in Sl. No. 2 |
made on the loans based on the guidelines prescribed by |
We gained an understanding of the Company-s key credit |
the Reserve Bank of India (-RBI-) in this regard. Under Ind AS, |
processes comprising granting, recording and monitoring of |
estimates regarding the impairment provision against financial |
loans as well as impairment provisioning. In addition, |
assets are based on the expected credit loss model developed by the Company based on the principles prescribed under Ind AS 109. |
- We read and assessed the Company-s impairment provisioning policy as per Ind AS 109; |
3. The Company from time to time enters into securitisation and |
- Obtained an understanding of the Company-s Expected Credit |
assignment transactions for transfer of financial assets under |
Loss (-ECL-) methodology, the underlying assumptions and |
arrangements which have different terms and conditions. |
performed sample tests to assess the staging of outstanding |
Under Ind AS, management has performed an evaluation of |
exposures; |
whether the financial asset de-recognition criteria prescribed |
- We assessed the Exposure at Default used in the impairment |
in Ind AS 109 is satisfied on a case to case basis and based on |
calculations on a test basis; |
such evaluation, related accounting adjustments are recorded |
- Obtained an understanding of the basis and methodology |
in the financial statements. |
adopted by management to determine 12 month and life-time |
Additionally, regarding the matter discussed in Sl. No. 2, as |
probability of defaults for various homogenous segments and |
explained in the notes to the financial statements for the year |
performed test checks; |
ended March 31, 2019, the impairment provision based on the |
- Obtained an understanding of the basis and methodology |
expected credit loss model requires the management of the |
adopted by management to determine Loss Given Defaults |
Company to make significant judgments in connection with |
|
related computation. These include: |
for various homogenous segments based on past recovery |
(a) Segmentation of the loan portfolio into homogenous pool of borrowers; |
experience, qualitative factors etc., and performed test checks; - Assessed the items of loans and advances, credit related |
contingent items as at the reporting date which are considered |
|
(b) Identification of exposures where there is a significant increase |
in the impairment computation as at the reporting date; |
in credit risk and those that are credit impaired; (c) Determination of the 12 month and life-time probability of |
- Assessed the data used in the impairment computation (including the data integrity of information extracted from the |
default for each of the segments identified; and |
Company-s IT systems); |
Key audit matters |
How our audit addressed the key audit matter |
(d) Loss given default for various exposures based on past trends / experience, management estimates etc., Note 3.5 to the Standalone Ind AS Financial Statements explains the various matters that the management has considered for developing this expected credit loss model. As at March 31, 2019, the Company has made a provision for impairment loss aggregating Rs.93,071 Lakhs against the loans outstanding. Due to the significance of the judgments used in both classification of loans and advances into various stages as well as the computation of expected credit losses on such financial assets as per Ind AS 109, this has been considered as an area of significance for our audit. |
- Enquired with the management regarding significant judgments and estimates involved in the impairment computation; - Assessed analytical reviews of disaggregated data to observe any unusual trends warranting additional audit procedures; and - Read the financial statement disclosures made as per Ind AS 109 and Ind AS 107. Procedures in relation to Sl no 3: - Obtained and read a sample of agreements entered for securitisation of financial assets and assignment transactions to assess management-s determination of the satisfaction of de-recognition conditions as per Ind AS 109; - Assessed the management estimates used to determine the gain on financial assets de-recognised during the year; - Assessed business model evaluation under Ind AS 109 in respect of portfolio of loans where financial assets are de-recognised during the year. |
Audit in an Information Technology (IT) enabled environment - including considerations on exceptions identified in IT environment |
|
Pursuant to various reporting requirements such as reporting on the internal controls over financial reporting, we place significant emphasis on the information systems, the controls, and process around such information systems and the usage of information from such systems for the purpose of financial reporting by the Management. The Company has information technology applications which are used across various class of transactions in its operations including automated and IT dependent manual controls that are embedded in them. Hence, our audit procedures have focus on IT systems and controls in them due the pervasive nature and complexity of the IT environment, operational volume across numerous locations daily and the reliance on automated and IT dependent manual controls. |
In assessing the reliability of electronic data processing, we included specialized IT auditors in our audit team. Our audit procedures focused on the IT infrastructure and applications relevant to financial reporting: - Assessing the information systems and the applications that is available in the Company in two phases: (i) IT General Controls and (ii) Application level embedded controls; - The aspects covered in the IT systems General Control audit were (i) User Access Management (ii) Change Management (iii) Other related ITGCs; - to understand the design and the operating effectiveness of such controls in the system; - Understanding of the changes that were made to the IT landscape during the audit period and assessing changes that have impact on financial reporting; - Performed tests of controls (including over compensatory controls wherever applicable) on the IT Application controls and IT dependent manual controls in the system. - Wherever applicable, we also assessed through direct sample tests, the information produced from these systems which were relied upon for our audit. |
Pending litigations with tax authorities (as described in Note 38 of the Ind /4S Financial Statements) |
|
The Company operates in a complex tax environment and is required to discharge direct and indirect tax obligations under various legislations such as Income Tax Act, 1961, the Finance Act, 1994 Goods and Services Tax Acts and VAT Acts of various states. |
In assessing the exposure of the Company for the tax litigations, we have performed the following procedures: - Obtained an understanding of the process laid down by the management for performing their assessment taking into |
Key audit matters |
How our audit addressed the key audit matter |
The tax authorities under these legislations have raised certain tax demands on the Company in respect of the past periods. The Company has disputed such demands and has appealed against them at appropriate forums. As at March 31, 2019 the Company has an amount of Rs.63,668 Lakhs involved in various pending tax litigations. Ind AS 37 requires the Company to perform an assessment of the probability of economic outflow on account of such disputed tax matters and determine whether any particular obligation needs to be recorded as a provision in the books of account or to be disclosed as a contingent liability. Considering the significant degree of judgement applied by the management in making such assessments and the resultant impact on the financial statements, we have considered it to be an area of significance for our audit. |
consideration past legal precedents, changes in laws and regulations, expert opinions obtained from external tax / legal experts (as applicable); - Assessed the processes and entity level controls established by the Company to ensure completeness of information with respect to tax litigations; - Along with our tax experts, we undertook the following procedures: - Reading communications with relevant tax authorities including notices, demands, orders, etc., relevant to the ending litigations, as made available to us by the management; - Testing the accuracy of disputed amounts from the underlying communications received from tax authorities and responses filed by the Company; - Considered the submissions made to appellate authorities and expert opinions obtained by the Company from external tax / legal experts (wherever applicable) which form the basis for management-s assessment; - Assessed the positions taken by the management in the light of the aforesaid information and based on the examination of the matters by our tax experts. - Read the disclosures included in the Standalone Ind AS Financial Statements in accordance with Ind AS 37. |
Information Other than the Standalone Ind AS Financial Statements and Auditorâs Report Thereon
The Company-s Board of Directors is responsible for the other information. The other information comprises Board-s Report including Annexures to the Board-s Report and Management Discussion and Analysis, Corporate Governance and General Shareholder Information and Business Responsibility report included in the Annual report, but does not include the Standalone Ind AS Financial Statements and our Auditorâs report thereon.
Our opinion on the Standalone Ind AS Financial Statements does not cover the other information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Ind AS Financial Statements, our responsibility is to read the other information and, in doing so, consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in the audit or otherwise appears to be materially misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this other information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and those Charged with Governance for the Financial Statements
The Company-s Board of Directors is responsible for the matters stated in section 134(5) of the Act with respect to the preparation of these Standalone Ind AS Financial Statements that give a true and fair view of the financial position, financial performance including other comprehensive income, cash flows and changes in equity of the Company in accordance with the accounting principles generally accepted in India, including the Indian Accounting Standards (Ind AS) specified under Section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended.
This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the 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 Ind AS Financial Statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the Standalone Ind AS Financial Statements, management is responsible for assessing the Company-s ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.
Those charged with governance are also responsible for overseeing the Company-s financial reporting process.
Auditorâs Responsibilities for the Audit of the Standalone Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Standalone Ind AS Financial Statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an Auditorâs report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with SAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these Standalone Ind AS Financial Statements.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
- Identify and assess the risks of material misstatement of the Standalone Ind AS Financial Statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
- Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances. Under section 143(3)(i) of the Act, we are also responsible for expressing our opinion on whether the Company has adequate internal financial controls system in place and the operating effectiveness of such controls.
- Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
- Conclude on the appropriateness of management-s use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company-s ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our Auditorâs report to the related disclosures in the 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 Auditorâs report. However, future events or conditions may cause the Company to cease to continue as a going concern.
- Evaluate the overall presentation, structure and content of the Standalone Ind AS Financial Statements, including the disclosures, and whether the Standalone Ind AS Financial Statements represent the underlying transactions and events in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and to communicate with them all relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the Standalone Ind AS Financial Statements for the financial year ended March 31, 2019 and are therefore the key audit matters. We describe these matters in our Auditorâs report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in the âAnnexure 1â a statement on the matters specified in paragraphs 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 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 including the Statement of Other Comprehensive Income, the Cash Flow Statement and Statement of Changes in Equity dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid Standalone Ind AS Financial Statements comply with the Accounting Standards specified under Section 133 of the Act, read with Companies (Indian Accounting Standards) Rules, 2015, as amended;
(e) On the basis of the written representations received from the directors as on March 31, 2019 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2019 from being appointed as a director in terms of Section 164 (2) of the Act;
(f) With respect to the adequacy of the internal financial controls over financial reporting of the Company with reference to these Standalone Ind AS Financial Statements and the operating effectiveness of such controls, refer to our separate Report in âAnnexure 2â to this report;
(g) In our opinion, the managerial remuneration for the year ended March 31, 2019 has been paid / provided by the Company to its directors in accordance with the provisions of Section 197 read with Schedule V to the Act;
(h) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its Standalone Ind AS Financial Statements - Refer Note 38 to the Standalone Ind AS Financial Statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 7 to the Standalone Ind AS Financial Statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
Annexure 1 referred to in our report of even date
Re: Cholamandalam Investment and Finance Company Limited (âthe Companyâ)
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) Property, plant and equipment have been physically verified by the management during the year and no material discrepancies were identified on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment are held in the name of the company. Immovable properties of loan and buildings whose title deeds have been pledged in favour of Trustees for the benefit of debenture holders as security for the Redeemable Nonconvertible Debentures, are held in the name of the Company based on the Trust Deed executed between the Trustees and the Company.
(ii) The Company-s business does not involve inventories and, accordingly, the requirements under paragraph 3(ii) of the Order are not applicable to the Company.
(iii) (a) The Company has granted loans to one subsidiary Company and one associate covered in the register maintained under Section 189 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the Company-s interest.
(b) The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the repayment/ receipts are regular.
(c) According to the information and explanations given by the management there are no amounts of loans which are overdue for more than ninety days from a Company covered in the register maintained under Section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, there are no loans, investments, guarantees, and securities granted in respect of which provisions of Sections 185 and 186 of the Act have not been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) during the year. Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the services of the Company.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees- state insurance, income-tax, sales tax, service tax, value added tax, goods and services tax, duty of custom, cess and other material statutory dues applicable to it. The provisions relating to wealth tax and duty of excise are not applicable to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees- state insurance, income-tax, sales tax, service tax, value added tax, goods and services tax, duty of custom, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of Income tax, Sales Tax, Value Added Tax and Service Tax which have not been deposited on account of any dispute are as follows:
Rs. in lacs
Name of the statute |
Nature of dues |
Amount not deposited |
Period to which the amounts relate |
Forum where the dispute is pending |
Income Tax Act, 1961 |
Tax and interest |
21,292 |
1990Rs.91, 1991Rs.92 and 2008Rs.09 |
Income Tax Appellate Tribunal |
2,908 |
2008Rs.09 to 2014Rs.15 |
CIT(Appeal) |
||
Bihar Finance Act, 1981 |
Sales Tax |
2.19 |
1992Rs.93 & 1993Rs.94 |
Sales Tax Appellate Tribunal |
Gujarat Sales Tax Act, 1969 |
Sales Tax |
2.03 |
1997Rs.98 |
Sales Tax Appellate Tribunal |
Karnataka Sales Tax Act |
Sales Tax |
357.46 |
2007Rs.08 to 2013Rs.14 |
Karnataka High court |
Maharashtra Value Added Tax Act, 2002 |
Sales Tax |
2,019 |
2013Rs.14 to 2015Rs.16 |
Deputy Commissioner of Sales Tax |
Delhi Sales Tax Act, 1975 |
Sales Tax |
7.58 |
1991Rs.92 |
Deputy Commissioner of Sales Tax |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
302.56 |
2007Rs.08 to 2013Rs.2014 |
Sales Tax Appellate Tribunal |
Tamil Nadu Value Added Tax Act, 2006 |
Sales Tax |
1,094 |
2006 Rs.07 to 2013Rs.14 |
High Court |
Tamil Nadu General Sales Tax Act, 1959 |
TNGST & CST |
998.80 |
1994Rs.95 |
High Court of Madras |
Uttar Pradesh Sales Tax Act |
Sales Tax |
62 |
1987Rs.2003 |
High Court |
Finance Act, 1994 |
Service Tax |
19,690 |
2005Rs.06 to 2017Rs.18 |
CESTAT |
*net of tax paid under protest/ refund adjusted
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of loans or borrowing to a financial institution, bank or government or dues to debenture holders.
(ix) According to the information and explanations given by the Management, the Company has not raised any money by way of initial public offer or further public offer. Further, monies raised by the Company by way of term loans were applied for the purpose for which those were raised, though idle/surplus funds which were not required for immediate utilisation were gainfully invested in liquid assets realizable on demand.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the financial statements and according to the information and explanations given by the management, we report that no fraud by the Company or no material fraud on the Company by the officers and employees of the Company has been noticed or reported during the year.
(xi) According to the information and explanations given by the management, the managerial remuneration has been paid / provided in accordance with the requisite approvals mandated by the provisions of Section 197 read with Schedule V to the Companies Act 2013.
(xii) In our opinion, the Company is not a nidhi company. Therefore, the provisions of clause 3(xii) of the Order are not applicable to the Company and hence not commented upon.
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with Sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) of the Order are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, we report that the Company has registered as required, under Section 45-IA of the Reserve Bank of India Act, 1934.
Annexure 2 to the Independent Auditorâs Report of even date on the Standalone Ind AS Financial Statements of Cholamandalam Investment and Finance Company Limted
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 (âthe Actâ)
We have audited the internal financial controls over financial reporting of Cholamandalam Investment and Finance Company Limited (âthe Companyâ) as of March 31, 2019 in conjunction with our audit of the Standalone Ind AS Financial Statements of the Company for the year ended on that date.
Management-s Responsibility for Internal Financial Controls
The Company-s Management is responsible for establishing 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 the 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.
Auditorâs Responsibility
Our responsibility is to express an opinion on the Company-s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the âGuidance Noteâ) and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. The procedures selected depend on the Auditorâs judgement, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.
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 authorisations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorised acquisition, use, or disposition of the company-s assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2019, 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.
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Subramanian Suresh
Partner
Membership Number: 083673
Place of Signature : Chennai
Date : April 27, 2019
Mar 31, 2018
Independent Auditor''s Report
To the Members of Cholamandalam Investment and Finance Company Limited Report on the Financial Statements
We have audited the accompanying standalone financial statements of Cholamandalam Investment and Finance Company Limited ("the Company"), which comprise the Balance Sheet as at March 31, 2018, the Statement of Profit and Loss and Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management''s Responsibility for the 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 accounting principles generally accepted in India, including the Companies (Accounting Standards) Rules, 2006 (as amended) specified under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding of 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 the design, implementation and maintenance of adequate internal financial control 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.
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, issued by the Institute of Chartered Accountants of India, as 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 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 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.
Opinion
In our opinion and to the best of our information and according to the explanations given to us, the 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, 2018, its profit, and its cash flows for the year ended on that date.
Other Matter
The financial statements of the Company for the year ended March 31, 2017, included in these standalone financial statements, have been audited by the predecessor auditor who expressed an unmodified opinion on those statements on April 28, 2017.
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 subsection (11) of Section 143 of the Act, we give in the Annexure 1 a statement on the matters specified in paragraphs 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 best of our knowledge and belief were necessary for the purpose of our audit;
(b) I n 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, Statement of Profit and Loss, and Cash Flow Statement dealt with by this Report are in agreement with the books of account;
(d) In our opinion, the aforesaid standalone financial statements comply with the Companies (Accounting Standards) Rules, 2006 (as amended) specified under Section 133 of the Act, read with the Companies (Accounts) Rules, 2014 and the Companies (Accounting Standards) Amendment Rules, 2016;
(e) On the basis of written representations received from the directors as on March 31, 2018, and taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2018, from being appointed as a director in terms of Section 164 (2) of the Act;
(f) 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 2" to this report;
(g) 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 disclosed the impact of pending litigations on its financial position in its financial statements - Refer Note
32 to the standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long-term contracts including derivative contracts - Refer Note 6 & 8 to the standalone financial statements;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company.
Re: Cholamandalam Investment and Finance Company Limited ("the Company")
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of property, plant and equipment.
(b) Property, plant and equipment have been physically verified by the management during the year and no material discrepancies were identified on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, plant and equipment are held in the name of the company. Immovable properties of loan and buildings whose title deeds have been pledged in favour of Trustees for the benefit of debenture holders as security for the Redeemable Nonconvertible Debentures, are held in the name of the Company based on the Trust Deed executed between the Trustees and the Company.
(ii) The Company''s business does not involve inventories and, accordingly, the requirements under paragraph 3(ii) of the Order are not applicable to the Company.
(iii) (a) The Company has granted loans to two subsidiary companies covered in the register maintained under Section 189 of the Companies Act, 2013. In our opinion and according to the information and explanations given to us, the terms and conditions of the grant of such loans are not prejudicial to the Company''s interest.
(b) The schedule of repayment of principal and payment of interest has been stipulated for the loans granted and the repayment/ receipts are regular.
(c) According to the information and explanations given by the management there are no amounts of loans which are overdue for more than ninety days from a Company covered in the register maintained under Section 189 of the Companies Act, 2013.
(iv) In our opinion and according to the information and explanations given to us, provisions of Sections 185 and 186 of the Companies Act 2013 in respect of loans to directors including entities in which they are interested and in respect of loans and advances given, investments made and, guarantees, and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits within the meaning of Sections 73 to 76 of the Companies Act 2013 and the Companies (Acceptance of Deposits) Rules, 2014 (as amended) during the year. Accordingly, the provisions of clause 3(v) of the Order are not applicable.
(vi) To the best of our knowledge and as explained, the Central Government has not specified the maintenance of cost records under Section 148(1) of the Companies Act, 2013, for the services of the Company.
(vii) (a) The Company is regular in depositing with appropriate authorities undisputed statutory dues including provident fund, employees'' state insurance, income-tax, sales tax, service tax, value added tax, goods and services tax, duty of custom, cess and other material statutory dues applicable to it. The provisions relating to wealth tax, and duty of excise are not applicable to the Company.
(b) According to the information and explanations given to us, no undisputed amounts payable in respect of provident fund, employees'' state insurance, income-tax, sales tax, service tax, value added tax, goods and services tax, duty of custom, cess and other material statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(c) According to the records of the Company, the dues outstanding of Income tax, Sales Tax, Value Added Tax and Service Tax which have not been deposited on account of any dispute are as follows:
Rs, in lakhs
Name of the statute |
Nature of dues |
Amount not deposited |
Period to which the amounts relate |
Forum where the dispute is pending |
Income Tax Act, 1961 |
Tax and interest |
261.37 |
1996-972,1997-98*, 2003-04, 2007-08 & 2008-09* |
High Court of Madras |
2.79 |
1990-91 & 1991-92 |
Income Tax Appellate Tribunal |
||
1,862.75 |
2009-10 to 2014-15 |
CIT(Appeal) |
||
Bihar Finance Act, 1981 |
Sales Tax |
2.19 |
1992-93 & 1993-94 |
Sales Tax Appellate Tribunal |
Gujarat Sales Tax Act, 1969 |
Sales Tax |
2.03 |
1997-98 |
Sales Tax Appellate Tribunal |
Karnataka Sales Tax Act |
Sales Tax |
357.46 |
2007-08 to 2013-14 |
Karnataka High court |
Maharashtra Value Added Tax Act, 2002 |
Sales Tax |
2,423.81 |
2008-09 to 2015-16 |
Sales Tax Appellate Tribunal |
Delhi Sales Tax Act, 1975 |
Sales Tax |
7.58 |
1991-92 |
Deputy Commissioner of Sales Tax |
Odisha Value Added Tax Act, 2004 |
Sales Tax |
302.56 |
2007-08 to 2013-2014 |
Sales Tax Appellate Tribunal |
Rajasthan Value Added Tax Act, 2003 |
Sales Tax |
4.01 |
2007-08 to 2013-14 |
Appellate Authority III |
- |
2006-07 to 2013-14* |
Rajasthan Tax Board |
||
- |
2006-07 to 2013-14* |
Supreme Court of India |
||
Tamil Nadu Value Added Tax Act, 2006 |
Sales Tax |
64.90 |
2014-15 |
Joint Commissioner of Commercial Taxes |
1,094.06 |
2006-07 to 2013-2014 |
Sales Tax Appellate Tribunal |
||
Tamil Nadu General Sales Tax Act, 1959 |
TNGST & CST |
998.80 |
1994-95 |
High Court of Madras |
Finance Act, 1994 |
Service Tax |
13,841.82 |
2007-08 to 2014-15 |
CESTAT |
(xiii) According to the information and explanations given by the management, transactions with the related parties are in compliance with Sections 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the financial statements, as required by the applicable accounting standards.
(xiv) According to the information and explanations given to us and on an overall examination of the balance sheet, the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures during the year under review and hence, reporting requirements under clause 3(xiv) of the Order are not applicable to the Company and, not commented upon.
(xv) According to the information and explanations given by the management, the Company has not entered into any non-cash transactions with directors or persons connected with him as referred to in Section 192 of Companies Act, 2013.
(xvi) According to the information and explanations given to us, we report that the Company has registered as required, under Section 45-IA of the Reserve Bank of India Act, 1934.
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section 143 of the Companies Act, 2013 ("the Act")
We have audited the internal financial controls over financial reporting of Cholamandalam Investment and Finance Company Limited ("the Company") as of March 31, 2018 in conjunction with our audit of the standalone financial statements of the Company for the year ended on that date.
Management''s Responsibility for Internal Financial Controls
The Company''s Management is responsible for establishing 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 the 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.
Auditor''s Responsibility
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting based on our audit. We conducted our audit in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting (the "Guidance Note") and the Standards on Auditing as specified under section 143(10) of the Companies Act, 2013, to the extent applicable to an audit of internal financial controls and, both issued by the Institute of Chartered Accountants of India. Those Standards and the Guidance Note require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether adequate internal financial controls over financial reporting was established and maintained and if such controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy of the internal financial controls system over financial reporting and their operating effectiveness. Our audit of internal financial controls over financial reporting included obtaining an understanding of internal financial controls over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk. 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.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the internal financial controls system over financial reporting.
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.
Inherent Limitations of Internal Financial Controls Over Financial Reporting
Because of the inherent limitations of internal financial controls over financial reporting, including the possibility of collusion or improper management override of controls, material misstatements due to error or fraud may occur and not be detected. Also, projections of any evaluation of the internal financial controls over financial reporting to future periods are subject to the risk that the internal financial control over financial reporting may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Opinion
In our opinion, the Company has, in all material respects, an adequate internal financial controls system over financial reporting and such internal financial controls over financial reporting were operating effectively as at March 31, 2018, 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.
For S.R. BATLIBOI & ASSOCIATES LLP
Chartered Accountants ICAI
Firm Registration Number: 101049W/E300004
per Subramanian Suresh
Place : Chennai Partner
Date : April 23, 2018 Membership Number: 083673
Mar 31, 2017
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED (âthe Companyâ), which comprise the Balance Sheet as at 31st March, 2017, the Statement of Profit and Loss and the Cash Flow Statement for the year then ended, and a summary of the significant accounting policies and other explanatory information.
Managementâs Responsibility for the Standalone Financial Statements
The Companyâs Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (âthe Actâ) 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 prescribed under section 133 of the Act.
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.
Auditorâs Responsibility
Our responsibility is to express an opinion on these standalone financial statements based on our audit.
In conducting 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 our audit of the standalone financial statements 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 auditorâs judgment, including the assessment of the risks of material misstatement of the standalone financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Companyâs 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. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Companyâs Directors, as well as evaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence obtained by us is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
Opinion
In our opinion and to the best of our information and according to the explanations given to us 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, 2017, and its profit and its cash flows for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143 (3) of the Act, based on our audit we report, to the extent applicable 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 relevant books of account.
d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards prescribed under section 133 of the Act.
e) On the basis of the written representations received from the directors as on 31st March, 2017 taken on record by the Board of Directors, none of the directors is disqualified as on 31st March, 2017 from being appointed as a director in terms of Section 164 (2) of the Act.
f) 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 âAnnexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Companyâs internal financial controls over financial reporting.
g) With respect to the other matters to be included in the Auditorâs Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, as amended, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its standalone financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses on long-term contracts;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
iv. The Company has provided requisite disclosures in the financial statements as regards its holding and dealings in Specified Bank Notes as defined in the Notification S.O. 3407(E) dated the 8th November, 2016 of the Ministry of Finance, during the period from 8th November 2016 to 30th December 2016; and such disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the Management.
2. As required by the Companies (Auditorâs Report) Order, 2016 (âthe Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in âAnnexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
Annexure âBâ to the Independent Auditorâs Report
(Referred to in paragraph 2 under âReport on Other Legal and Regulatory Requirementsâ section 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 fixed assets were physically verified during the year by the Management in accordance with a regular programme of verification which, in our opinion, provides for physical verification of all the fixed assets at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification.
(c) According to the information and explanations given to us and the records examined by, we report that, the title deeds, comprising all the immovable properties of land and buildings, are held in the name of the Company as at the balance sheet date. Immovable properties of land and buildings whose title deeds have been pledged in favour of Trustees for the benefit of debenture holder as security for Redeemable Non-Convertible Debentures, are held in the name of the Company based on the Trust Deed executed between the Trustees and the Company.
(ii) The Company does not have any inventory and hence reporting under clause (ii) of the CARO 2016 is not applicable.
(iii) According to the information and explanations given to us, the Company has granted unsecured loans, to a company covered in the register maintained under section 189 of the Companies Act, 2013, in respect of which:
(a) The terms and conditions of the grant of such loans are, in our opinion, prima facie, not prejudicial to the Companyâs interest.
(b) The schedule of repayment of principal and payment of interest has been stipulated and repayments or receipts of principal amounts and interest have been regular as per stipulations.
(c) There is no overdue amount remaining outstanding as at the year-end.
(iv) In our opinion and according to the information and explanations given to us, the Company has complied with the provisions of Sections 185 and 186 of the Companies Act, 2013 in respect of grant of loans, making investments and providing guarantees and securities, as applicable.
(v) According to the information and explanations given to us, the Company has not accepted any deposit during the year. In respect of unclaimed deposits, the Company has complied with the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and the Companies (Acceptance of Deposit) Rules, 2014 as amended, as applicable to the Company, with regard to the deposits accepted from the public prior to November 1, 2006. However, in respect of overdue amounts to totalling to Rs. 0.11 lakhs, payments have not been made as per instructions received from the Central Bureau of Investigation. Other than the above, according to the information and explanations given to us, no order has been passed by the Company Law Board or the National Company Law Tribunal or the Reserve Bank of India or any court or any other Tribunal.
(vi) Having regard to the nature of the Companyâs business / activities, reporting under clause (vi) CARO 2016 is not applicable.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory dues, including Provident Fund, Employeesâ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues applicable to it to the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident Fund, Employeesâ State Insurance, Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, Value Added Tax, Cess and other material statutory dues in arrears as at March 31, 2017 for a period of more than six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax, Service Tax, Customs Duty, Excise Duty, and Value Added Tax which have not been deposited as on March 31, 2017 on account of disputes are given below:
Name of Statute |
Nature of Dues |
Forum where Dispute is Pending |
Period to which the Amount Relates (Financial Year) |
Amount Involved Rs. in lakhs |
Income Tax Act, 1961 |
Tax and Interest |
Commissioner of Income Tax (Appeals) |
2008-09, 2009-10, 2011-12, 2012-13, 2013-14 |
22,454.00 |
Income Tax Act, 1961 |
Tax and Interest |
Appellate Tribunal (ITAT) |
1990-91, 1991-92, 2003-04 |
12.99 |
Tamil Nadu General Sales Tax Act, 1959 |
TNGST |
Madras High Court |
1995-96 |
986.98 |
Tamil Nadu VAT Act, 2006 |
Sales Tax |
Tamil Nadu Sales Tax Appellate Tribunal |
2006-07 to 2013-14 |
1208.80 |
Tamil Nadu VAT Act, 2006 |
Sales Tax |
Joint Commissioner of Commercial Taxes |
2014-15 |
64.90 |
Central Sales tax Act, 1956 |
Sales Tax |
Sales Tax Appellate Tribunal |
1995-96 |
11.83 |
Bihar Finance Act, 1981 |
Sales Tax |
Sales Tax Appellate Tribunal |
1993-94 and 1994-95 |
2.19 |
Gujarat Sales Tax Act, 1969 |
Sales Tax |
Sales Tax Appellate Tribunal |
1997-98 |
2.03 |
Delhi Sales Tax Act, 1975 |
Sales Tax |
Deputy Commissioner of Sales Tax |
1990-91 |
7.58 |
Odisha VAT Act, 2004 |
Sales Tax |
Joint Commissioner of Sales Tax (Appeals) |
2006-2011 |
42.00 |
Odisha VAT Act, 2004 |
Sales Tax |
Odisha Sales Tax Appellate Tribunal |
February 2012 to March 2014 |
268.56 |
Karnataka Sales Tax Act |
Sales Tax |
Karnataka Sales Tax Liability |
2006-07 to 2012-13 |
357.46 |
(viii) I n our opinion and according to the information and explanations given to us, the Company has not defaulted in the repayment of loans or borrowings to financial institutions, banks and government and dues to debenture holders.
(ix) The Company has not raised moneys by way of initial public offer or further public offer (including debt instruments). In our opinion and according to the information and explanations given to us, the term loans have been applied by the Company during the year for the purposes for which they were raised.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company and no fraud on the Company by its officers or employees has been noticed or reported during the year.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided managerial remuneration in accordance with the requisite approvals mandated by the provisions of section 197 read with Schedule V to the Companies Act, 2013.
(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of the CARO 2016 Order is not applicable.
(xiii) In our opinion and according to the information and explanations given to us the Company is in compliance with Section 188 and 177 of the Companies Act, 2013 where applicable, for all transactions with the related parties and the details of related party transactions have been disclosed in the financial statements etc. as required by the applicable accounting standards.
(xiv) During the year the Company has not made any preferential allotment or private placement of shares or fully or partly convertible debentures and hence reporting under clause (xiv) of CARO 2016 is not applicable to the Company.
(xv) In our opinion and according to the information and explanations given to us, during the year the Company has not entered into any non-cash transactions with its directors or persons connected with him and hence provisions of section 192 of the Companies Act, 2013 are not applicable.
(xvi) The Company is required to be registered under section 45-I of the Reserve Bank of India Act, 1934 and it has obtained the registration.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firmâs Registration No.: 008072S)
Bhavani Balasubramanin
Place : Chennai Partner
Date : April 28, 2017 (Membership No.: 22156)
Mar 31, 2015
We have audited the accompanying standalone financial statements of
CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED ("the Company"),
which comprise the Balance Sheet as at March 31, 2015, the Statement of
Profit and Loss, the Cash Flow Statement for the year then ended, and a
summary of the significant accounting policies and other explanatory
information.
Management's Responsibility for the 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 financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors' 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 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, 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 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.
Opinion
In our opinion and to the best of our information and according to the
explanations given to us, 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 profit and its cash flows for the year ended
on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government in terms of Section 143(11) of
the Act, we give in the Annexure a statement on the matters specified
in paragraphs 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 best of our knowledge and belief were necessary for the
purposes of our audit.
(b) I n 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) 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) On the basis of the written representations received from the
directors as on March 31,2015 taken on record by the Board of
Directors, none of the directors is disqualified as on March 31,2015
from being appointed as a director in terms of Section 164 (2) of the
Act.
(f) With respect to the other matters to be included in the Auditors'
Report in accordance with the Rule 11 of the Companies (Audit and
Auditors) Rules, 2014, in our opinion and to the best of our
information and according to the explanation given to us:
i. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements;
ii. The Company has made provision, as required under the applicable
law or accounting standards, for material foreseeable losses, if any,
on long-term contracts;
iii. There has been no delay in transferring amounts, required to be
transferred, to the Investor Education and Protection Fund by the
Company.
Annexure to the Independent Auditors' Report (Referred to in paragraph
1 under 'Report on Other Legal and Regulatory Requirements' section of
our report of even date)
(i) Having regard to the nature of the Company's
business/activities/results during the year,clauses 3(ii) and 3(vi) of
the Order are not applicable to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) Some of the fixed assets were physically verified during the year
by the Management in accordance with a programme of verification, which
in our opinion provides for physical verification of all the fixed
assets at reasonable intervals. According to the information and
explanations given to us, no material discrepancies were noticed on
such verification.
(iii) According to the information and explanations given to us, the
Company has granted unsecured loans, to a company covered in the
Register maintained under Section 189 of the Companies Act 2013, in
respect of such loans:
(a) The receipts of principal amounts and interest have been regular /
as per stipulations.
(b) There were no overdue amounts remaining outstanding as at the
year-end.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of fixed assets and for the sale of services. During the
course of our audit we have not observed any major weaknesses in such
internal control system. The Company does not purchase inventory nor
does it sell any goods (other than repossessed automobile assets) in
the ordinary course of its business.
(v) According to the information and explanations given to us, the
Company has not accepted any deposit from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 73 to Section 76 and any other relevant
provisions of the Companies Act, 2013 and the Companies (Acceptance of
Deposit) Rules, 2014 as amended, as applicable to the Company, with
regard to the deposits accepted from the public prior to 1 November
2006. However, in respect of overdue amounts totalling to Rs. 0.11 lakhs,
payments have not been made as per instructions received from the
Central Bureau of Investigation. Other than the above, according to the
information and explanations given to us, no order has been passed by
the Company Law Board or the National Company Law Tribunal or the
Reserve Bank of India or any Court or any other Tribunal.
(vi) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Employees' State Insurance, Income-tax,
Sales Tax, Wealth Tax, Service Tax, Customs Duty, Value Added Tax, Cess
and other material statutory dues applicable to it with the appropriate
authorities.
(b) There were no undisputed amounts payable in respect of Provident
Fund, Employees' State Insurance, Income-tax, Sales Tax, Wealth Tax,
Service Tax, Customs Duty, Value Added Tax, Cess and other material
statutory dues in arrears as at March 31,2015 for a period of more than
six months from the date they became payable.
(c) Details of dues of Income-tax, Sales Tax and Value Added Tax which
have not been deposited as on March 31,2015 on account of disputes are
given below:
Name of the Statute Nature of Dues Forum where Dispute
is pending
Income Tax Act, 1961 Tax and Interest Commissioner of
Income Tax (Appeals)
Income Tax Act, 1961 Tax and Interest Appellate Tribunal
(ITAT)
Income Tax Act, 1961 Tax and Interest Madras High Court
Tamil Nadu General TNGST Sales Tax Appellate
Sales Tax Act, 1959 Tribunal
Tamil Nadu VAT Act, Sales Tax Appellate Assistant
2006 Commissioner
Commercial Tax
Central Sales Tax Act, Sales Tax Sales Tax Appellate
1956 Tribunal
Bihar Finance Act, 1981 Sales Tax Sales Tax Appellate
Tribunal
Gujarat Sales Tax Act, Sales Tax Sales Tax Appellate
1969 Tribunal
Delhi Sales Tax Act, Sales Tax Additional
1975 Commissioner of Sales
Tax (Appeals)
Rajasthan VAT Act, 2003 Sales Tax Deputy Commissioner
(Admn)
OVAT Act, 2004 Sales Tax Joint Commissioner of
Sales Tax (Appeals)
OVAT Act, 2004 Sales Tax Additional
Commissioner of Sales
Tax (Appeals)
Karnataka Sales Tax Act, Sales Tax Joint Commissioner of
1957 Sales tax (Appeals)
Name of the Statute Period to which the Amount involved
amount relates (Rs. in lakhs)
(Financial Year)
Income Tax Act, 1961 2005- 06, 2008-09 and 1,926.26
2011-12
Income Tax Act, 1961 1990- 91, 1991-92, 2000-01 534.58
and 2006-07 to 2008-09
Income Tax Act, 1961 2000-01, 2001-02 and 30.02
2002-03
Tamil Nadu General
Sales Tax Act, 1959 1995-96 986.98
Tamil Nadu VAT Act,
2006 2006- 07 to 2014-15 1,817.76
Central Sales Tax Act,
1956 1995-96 11.83
Bihar Finance Act, 1981 1993-94 and 1994-95 2.19
Gujarat Sales Tax Act,
1969 May 1997 to September 2.03
1997
Delhi Sales Tax Act,
1975 1991- 92 7.58
Rajasthan VAT Act, 2003 April 2006 to June 2014 44.55
OVAT Act, 2004 July 2007 to January 2013 42.00
OVAT Act, 2004 February 2012 to March 298.56
2014
Karnataka Sales Tax Act,
1957 2007- 08 to 2013-14 357.46
(d) The Company has been regular in transferring amounts to the
Investor Education and Protection Fund in accordance with the relevant
provisions of the Companies Act, 1956 (1 of 1956) and Rules made
thereunder within time.
(vii) The Company does not have accumulated losses at the end of the
financial year and the Company has not incurred cash losses during the
financial year covered by our audit and in the immediately preceding
financial year.
(viii) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
financial institutions, banks and debenture holders.
(ix) According to the information and explanations given to us, the
Company has not given guarantees for loans taken by others from banks
and financial institutions.
(x) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained, other than
temporary deployment pending application.
(xi) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year though
there have been a few cases of irregularities amounting to Rs. 182.13
lakhs (Refer Note 38 to the financial statements) detected and
appropriately dealt with by the management.
For DELOITTE HASKINS & SELLS
Chartered Accountants
(Firm's Registration No.: 008072S)
Geetha Suryanarayanan
Partner
Chennai, April 24, 2015 (Membership No.: 29519)
Mar 31, 2014
Report on the Financial Statements
1. We have audited the accompanying fnancial statements of
CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED ("the Company"),
which comprise the Balance Sheet as at 31 March, 2014, the Statement of
Proft and Loss and the Cash Flow Statement for the year then ended, and
a summary of the signifcant accounting policies and other explanatory
information.
Management''s Responsibility for the Financial Statements
2. The Company''s Management is responsible for the preparation of
these fnancial statements that give a true and fair view of the
fnancial position, fnancial performance and cash fows of the Company in
accordance with the Accounting Standards notifed under the Companies
Act, 1956 (Âthe Act") (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs)
and in accordance with the accounting principles generally accepted in
India. This responsibility includes the design, implementation and
maintenance of internal control relevant to the preparation and
presentation of the fnancial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. Our responsibility is to express an opinion on these fnancial
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 requirements and plan and perform the audit to obtain
reasonable assurance about whether the fnancial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and the disclosures in the fnancial statements. The
procedures selected depend on the auditor''s judgment, including the
assessment of the risks of material misstatement of the fnancial
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 fnancial statements
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Company''s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
reasonableness of the accounting estimates made by the Management, as
well as evaluating the overall presentation of the fnancial statements.
We believe that the audit evidence we have obtained is suffcient and
appropriate to provide a basis for our audit opinion.
Opinion
5. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid fnancial 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2014;
(b) in the case of the Statement of Proft and Loss, of the proft of the
Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash fows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
6. As required by the Companies (Auditor''s Report) Order, 2003 (Âthe
Order") issued by the Central Government in terms of Section 227(4A) of
the Act, we give in the Annexure a statement on the matters specifed in
paragraphs 4 and 5 of the Order.
7. As required by Section 227(3) of the Act, we report that:
(a) 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.
(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 Proft and Loss, and the Cash
Flow Statement dealt with by this Report are in agreement with the
books of account.
(d) In our opinion, the Balance Sheet, the Statement of Proft and Loss,
and the Cash Flow Statement comply with the Accounting Standards
notifed under the Act (which continue to be applicable in respect of
Section 133 of the Companies Act, 2013 in terms of General Circular
15/2013 dated 13 September, 2013 of the Ministry of Corporate Affairs).
(e) On the basis of the written representations received from the
directors as on 31 March, 2014 taken on record by the Board of
Directors, none of the directors is disqualifed as on 31 March, 2014
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
ANNEXURE TO THE INDEPENDENT AUDITORS'' REPORT
(Referred to in paragraph 6 of our report of even date)
(i) Having regard to the nature of the Company''s business / activities
/ results during the year, clauses 4(ii), 4(viii), 4(xiii), 4(xiv), and
4(xx) of paragraph 4 of the Order are not applicable to the Company.
(ii) In respect of its fxed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fxed assets.
(b) Some of the fxed assets were physically verifed during the year by
the Management in accordance with a programme of verifcation, which in
our opinion provides for physical verifcation of all the fxed assets at
reasonable intervals. According to the information and explanations
given to us no material discrepancies were noticed on such verifcation.
(c) The fxed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fxed assets of the Company and
such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of loans, secured or unsecured, granted by the Company
to companies, frms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(a) The Company has granted loans aggregating Rs.12,930 lakhs to two
parties during the year. At the year-end, the outstanding balances of
such loans granted aggregated Rs.800 lakhs (one party) and the maximum
amount involved during the year was Rs.2,200 lakhs (two parties).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie, not prejudicial to the interest of
the Company.
(c) The receipts of principal amounts and interest have been regular /
as per stipulations.
(d) There were no overdue amounts remaining outstanding as at the
year-end.
In respect of loans, secured or unsecured, taken by the Company from
companies, frms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(a) The Company has taken loans aggregating Rs.4,300 lakhs from two
parties during the year. At the year-end, the outstanding balances of
such loans taken aggregated Rs.8,138 lakhs (two parties) and the maximum
amount involved during the year was Rs.8,454 lakhs (two parties).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interest of the
Company.
(c) The payments of principal amounts and interest in respect of such
loans are regular / as per stipulations.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of fxed assets and for the sale of services and during the
course of our audit we have not observed any continuing failure to
correct major weaknesses in such internal control system. The Company
does not purchase inventory nor does it sell any goods (other than
repossessed automobile assets) in the ordinary course of its business.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction (excluding loans reported under
paragraph (iii) above) is in excess of Rs.5 lakhs in respect of any
party, the transactions have been made at prices which are prima facie
reasonable having regard to the prevailing market prices at the
relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposit from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A, 58AA or any other relevant provisions of
the Companies Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975, as applicable to the Company, with regard to the deposits
accepted from the public prior to 1 November, 2006. However, in respect
of overdue amounts totalling to Rs.1.86 lakhs, payments have not been
made since the repayment of the same to the depositors has been stayed
by the Honourable Madras High Court. Further, in respect of overdue
amounts totalling to Rs.0.11 lakhs, payments have not been made as per
instructions received from the Central Bureau of Investigation. Other
than the above, according to the information and explanations given to
us, no order has been passed by the Company Law Board or the National
Company Law Tribunal or the Reserve Bank of India or any Court or any
other Tribunal.
(vii) In our opinion, the internal audit functions carried out during
the year by the Company''s internal audit department and an external
agency appointed by the Management have been commensurate with the size
of the Company and the nature of its business.
(viii) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident
Fund, Investor Education and Protection Fund, Employees'' State
Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty, Cess and other material statutory dues in arrears as
at 31 March, 2014 for a period of more than six months from the date
they became payable.
(ix) The Company does not have accumulated losses at the end of the
fnancial year and the Company has not incurred cash losses during the
fnancial year covered by our audit and in the immediately preceding
fnancial year.
(x) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
fnancial institutions, banks and debenture holders.
(xi) In our opinion, the Company has maintained adequate documents and
records where it has granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xii) According to the information and explanations given to us, the
Company has not given guarantees for loans taken by others from banks
and fnancial institutions.
(xiii) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained, other than
temporary deployment pending application.
(xiv) In our opinion and according to the information and explanations
given to us, and on an overall examination of the Balance Sheet of the
Company, we report that funds raised on short-term basis have, prima
facie, not been used during the year for long-term investment.
(xv) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the Register maintained under Section 301 of the
Companies Act, 1956.
(xvi) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 15,660
secured debentures of Rs.1,000,000 each. The Company has created security
in respect of these debentures issued.
(xvii) To the best of our knowledge and according to the information
and explanations given to us, no fraud by the Company and no material
fraud on the Company has been noticed or reported during the year
though there have been a few cases of irregularities amounting to Rs.112
lakhs (Refer Note 38 to the fnancial statements) detected and
appropriately dealt with by the management.
For Deloitte Haskins & Sells
Chartered Accountants
(Firm''s Registration No.: 008072S)
Geetha Suryanarayanan
Date : 28 April, 2014 Partner
Place : Chennai (Membership No.: 29519)
Mar 31, 2013
Report on the Financial Statements
1. We have audited the accompanying financial statements of
CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED ("the Company"),
which comprise the Balance Sheet as at 31 March, 2013, the Statement of
Profit and Loss and the Cash Flow Statement for the year then ended,
and a summary of the significant accounting policies and other
explanatory information.
Management''s Responsibility for the Financial Statements
2. The Company''s Management is responsible for the preparation of
these 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 Standards referred to in Section
211(3C) of the Companies Act, 1956 ("the Act") and in accordance with
the accounting principles generally accepted in India. 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 misstatement, whether due to fraud or error.
Auditors'' Responsibility
3. 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 requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. 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 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, but not for the purpose of expressing an opinion on the
effectiveness of the Company''s internal control. An audit also includes
evaluating the appropriateness of the accounting policies used and the
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 audit opinion.
Opinion
5. In our opinion and to the best of our information and according to
the explanations given to us, the aforesaid 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:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
Report on Other Legal and Regulatory Requirements
6. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government in terms of Section 227(4A) of
the Act, we give in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the Order.
7. As required by Section 227(3) of the Act, we report that:
(a) 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.
(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) In our opinion, the Balance Sheet, the Statement of Profit and
Loss, and the Cash Flow Statement comply with the Accounting Standards
referred to in Section 211(3C) of the Act.
(e) On the basis of the written representations received from the
directors as on 31 March, 2013 taken on record by the Board of
Directors, none of the directors is disqualified as on 31 March, 2013
from being appointed as a director in terms of Section 274(1)(g) of the
Act.
Annexure to the Independent Auditors'' Report
(Referred to in paragraph 6 of our report of even date)
(i) Having regard to the nature of the Company''s business / activities
/ results during the year, clauses 4(ii), 4(viii), 4(x), 4(xiii),
4(xiv), 4(xv) and 4(xx) of paragraph 4 of the Order are not applicable
to the Company.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of fixed assets.
(b) Some of the fixed assets were physically verified during the year
by the Management in accordance with a programme of verification, which
in our opinion provides for physical verification of all the fixed
assets at reasonable intervals. According to the information and
explanations given to us no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act 1956, according to the
information and explanations given to us:
(a) The Company has granted loans aggregating Rs. 3,650 lakhs to one
party during the year. At the year-end, the outstanding balances of
such loans granted aggregated Rs. Nil (one party) and the maximum
amount involved during the year was Rs. 1,500 lakhs (one party)
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie, not prejudicial to the interest of
the Company,
(c) The receipts of principal amounts and interest have been regular /
as per stipulations.
(d) There were no overdue amounts remaining outstanding as at the
year-end.
In respect of loans, secured or unsecured, taken by the Company from
companies, firms or other parties covered in the Register maintained
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(a) The Company has taken loans aggregating Rs. 3,011 lakhs from two
parties during the year. At the year-end, the outstanding balances of
such loans taken aggregated Rs. 2,041 lakhs (two parties) and the
maximum amount involved during the year was Rs. 2,041 lakhs (two
parties).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interest of the
Company,
(c) The payments of principal amounts and interest in respect of such
loans are regular / as per stipulations.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business for the
purchase of fixed assets and for the sale of services and during the
course of our audit we have not observed any continuing failure to
correct major weaknesses in such internal control system. The Company
does not purchase inventory nor does it sell any goods (other than
repossessed automobile assets) in the ordinary course of its business.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to in Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs. 5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) According to the information and explanations given to us, the
Company has not accepted any deposit from the public during the year.
In respect of unclaimed deposits, the Company has complied with the
provisions of Sections 58A, 58AA or any other relevant provisions of
the Companies Act, 1956 and the Companies (Acceptance of Deposits)
Rules, 1975, as applicable to the Company, with regard to the deposits
accepted from the public prior to 01 November, 2006. However, in
respect of overdue amounts totalling to Rs. 1.86 lakhs, payments have
not been made since the repayment of the same to the depositors has
been stayed by the Madras High Court. Further, in respect of overdue
amounts totalling to Rs. 0.11 lakhs, payments have not been made as per
instructions received from the Central Bureau of Investigation. Other
than the above, according to the information and explanations given to
us, no order has been passed by the Company Law Board or the National
Company Law Tribunal or the Reserve Bank of India or any Court or any
other Tribunal.
(vii) In our opinion, the internal audit functions carried out during
the year by the Company''s internal audit department and an external
agency appointed by the Management have been commensurate with the size
of the Company and the nature of its business.
(viii) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has been regular in depositing undisputed statutory
dues, including Provident Fund, Investor Education and Protection Fund,
Employees'' State Insurance, Income-tax, Sales Tax, Wealth Tax, Service
Tax, Customs Duty, Excise Duty, Cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Provident
Fund, Investor Education and Protection Fund, Employees'' State
Insurance, Income-tax, Sales Tax, Wealth Tax, Service Tax, Customs
Duty, Excise Duty, Cess and other material statutory dues in arrears as
at 31 March, 2013 for a period of more than six months from the date
they became payable.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,
Customs Duty, Excise Duty and Cess which have not been deposited as on
31 March, 2013 on account of disputes are given below:
Name of the Statute Nature of Forum where
Dues Dispute is pending
Income Tax Act, 1961 Tax and Commissioner of
Interest Income Tax (Appeals)
Income Tax Act, 1961 Tax and Appellate Tribunal
Interest (ITAT)
Income Tax Act, 1961 Tax and Madras High Court
Interest
Income Tax Act, 1961 Tax Deducted Commissioner of
at Source Income Tax (Appeals)
Tamil Nadu General Sales Tax Sales Tax Appellate
Sales Tax Act, 1959 Tribunal
Central Sales Tax Act, Sales Tax Sales Tax Appellate
1956 Tribunal
Bihar Finance Act, 1981 Sales Tax Sales Tax Appellate
Tribunal
Gujarat Sales Tax Act, Sales Tax Sales Tax Tribunal
1969
Delhi Sales Tax Act, Sales Tax Deputy Commissioner
1975 of Sales Tax Appeals
Amount
Name of the Statute Period to which involved
the amount relates (Rs.
(Financial Year) laksh)
Income Tax Act 1961 2000-01 , 2005-06 and 1,346
2009-10
Income Tax Act, 1961 1990-91, 1991-92, 2003-04 12
Income Tax Act, 1961 1995-96, 2000-01, 2001- 97
02, 2002-03
Income Tax Act, 1961 2009-10 225
Tamil Nadu General Sales
Tax Act 1959 1995-96 34
Central Sales Tax Act 1956 1995-96 15
Bihar Finance Act 1987 1993-94 and 1994-95 3
Gujarat Sales Tax Act 1969 1997-98 2
Delhi Sales Tax Act 1975 1991-92 7
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
financial institutions, banks and debenture holders.
(x) In our opinion, the Company has maintained adequate documents and
records where it has granted loans and advances on the basis of
security by way of pledge of shares, debentures and other securities.
(xi) In our opinion and according to the information and explanations
given to us, the term loans have been applied by the Company during the
year for the purposes for which they were obtained, other than
temporary deployment pending application.
(xii) In our opinion and according to the information and explanations
given to us, and on an overall examination of the Balance Sheet of the
Company, we report that funds raised on short-term basis have, prima
facie, not been used during the year for long-term investment.
(xiii) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the Register maintained under Section 301 of the
Companies Act, 1956.
(xiv) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 20,537
debentures of Rs. 1,000,000 each and 2,860 debentures of Rs. 500,000
each. The Company has created security in respect of the debentures
issued.
(xv) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year though
there have been a few cases of irregularities amounting to Rs. 143.76
lakhs (Refer Note 39 to the financial statements) detected and
appropriately dealt with by the management.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No.: 008072S)
Geetha Suryanarayanan
Place : Chennai Partner
Date : 26 April, 2013 (Membership No.: 29519)
Mar 31, 2012
1. We have audited the attached Balance Sheet of CHOLAMANDALAM
INVESTMENT AND FINANCE COMPANY LIMITED ("the Company") as at 31 March,
2012, the Statement of Profit and Loss and the Cash Flow Statement of
the Company for the year ended on that date, both 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 the 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 misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the 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 (Auditor's Report) Order, 2003 (CARO)
issued by the Central Government in terms of Section 227(4A) 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. Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
(a) 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;
(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) in our opinion, the Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(e) 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2012;
(ii) in the case of the Statement of Profit and Loss, of the profit of
the Company for the year ended on that date and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of the written representations received from the
Directors as on 31 March, 2012 taken on record by the Board of
Directors, none of the Directors is disqualified as on 31 March, 2012
from being appointed as a director in terms of Section 274(1)(g) of the
Companies Act, 1956.
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the Company's
business/activities/result, clauses 4(ii), 4(viii), 4(x), 4(xiii),
4(xiv) and 4(xx) of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other parties covered in the Register under
Section 301 of the Companies Act, 1956, according to the information
and explanations given to us:
(a) The Company has granted loans to three subsidiaries aggregating to
Rs859 lakhs. At the year-end, the outstanding balances of such loans
aggregated to RsNIL. The maximum amount involved during the year was
Rs911 lakhs (number of parties - three).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipts of principal amounts and interest have been regular/as
per stipulations.
(d) There were no overdue amounts remaining outstanding as at the year
end.
The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchases of fixed assets and the sale of repossessed automobile
assets and services. During the course of our audit, we have not
observed any major weakness in such internal control system. The
Company does not purchase inventory nor does it sell any goods (other
than repossessed automobile assets) in the ordinary course of its
business.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs5 lakhs in respect
of any party, the transactions have been made at prices which are prima
facie reasonable having regard to the prevailing market prices at the
relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the Companies (Acceptance of Deposits) Rules, 1975, as
applicable to the Company, with regard to the deposits accepted from
the public prior to November 1, 2006. However, in respect of overdue
amounts totalling to Rs1.86 lakhs, payments have not made since the
repayment of the same to the depositors has been stayed by the Madras
High Court. Further, in respect of overdue amounts totalling to Rs0.11
lakhs, payments have not been made as per instructions received from
the Central Bureau of Investigation. Other than the above, according to
the information and explanations given to us, no order has been passed
by the Company Law Board or the National Company Law Tribunal or the
Reserve Bank of India or any Court or any other Tribunal.
(vii) In our opinion, the internal audit functions carried out during
the year by the Company's internal audit department as well as an
external firm of Chartered Accountants appointed by the Management,
have been commensurate with the size of the Company and the nature of
its business.
(viii) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Income-tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Cess
and other material statutory dues applicable to it with the appropriate
authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Wealth Tax, Cess and other material statutory dues in arrears as at 31
March, 2012 for a period of more than six months from the date they
became payable except for fixed deposit amounts totalling to Rs1.97
lakhs which have not been credited to Investor Education and Protection
Fund since the repayment to the depositors has been stayed by the
Madras High Court for an amount of Rs1.86 lakhs and payments to the
extent of Rs0.11 lakhs have not been made pursuant to instructions
received from Central Bureau of Investigation.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax,
and Cess which have not been deposited as on 31 March, 2012 on account
of disputes are given below:
Statute Nature of Forum where
Dues Dispute is
pending
Income Tax Act, 1961 Tax and Interest Commissioner of Income
Tax (Appeals)
Income Tax Act, 1961 Tax and Interest Appellate Tribunal (ITAT)
Income Tax Act, 1961 Tax and Interest Madras High Court
Tamil Nadu General
Sales Sales Tax Sales Tax Appellate
Tax Act, 1959 Tribunal
Central Sales
Tax Act, 1956 Sales Tax Sales Tax Appellate
Tribunal
Bihar Finance
Act, 1981 Sales Tax Sales Tax Appellate
Tribunal
Gujarat Sales Tax
Act, 1969 Sales Tax Sales Tax Appellate
Tribunal
Delhi Sales Tax
Act, 1975 Sales Tax Deputy Commissioner of
Sales Tax Appeals
U.P Trade Tax Act, 1948 Sales Tax Deputy Commissioner of
Trade Tax
Period to which Amount
the amount relates involved
(Financial Year) (Rsin lakhs)
2000-01 and 2005-06 405.76
1990-91 and 1991-92 2.79
1995-96 and 2000-01 24.99
1994-95 228.59
1994-95 59.77
1992-93 and 1993-94 2.19
1997-98 2.03
1990-91 7.58
1991-92 to 1998-99 9.11
(ix) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks and debenture holders.
(x) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xi) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks and financial institutions
are not prima facie prejudicial to the interests of the Company.
(xii) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained, other than temporary deployment pending
application.
(xiii) On the basis of review of Asset / Liability Gap Analysis report,
giving utilisation of funds on overall basis and the related
information made available to us and as per the explanation given to
us, we report that funds raised on short term basis have, prima facie,
not been used during the year for long term investment.
(xiv) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the Register maintained under Section 301 of the
Companies Act, 1956.
(xv) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 21,929
debentures of Rs10 lakh each. The Company has created security in
respect of the debentures issued.
(xvi) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the Company and no material fraud
on the Company has been noticed or reported during the year.
For Deloitte Haskins & Sells
Chartered Accountants
(Registration No.008072S)
M.K.Ananthanarayanan
Place: Chennai Partner
Date: 26 April, 2012 (Membership No.19521)
Mar 31, 2011
1. We have audited the attached Balance Sheet of
CHOLAMANDALAM INVESTMENT AND FINANCE COMPANY LIMITED (formerly known as
Cholamandalam DBS Finance Limited) ("the Company") as at 31 March,
2011, the Profit and Loss Account and the Cash Flow Statement of the
company for the year ended on that date, both 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 the 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 misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the 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 (CARO)
issued by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, we enclose in the Annexure a statement on the
maters specified in paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
(a) 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;
(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 Profit and Loss Account and the Cash Flow
Statement dealt with by this report are in agreement with the books of
account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(e) 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
company as at 31 March, 2011;
(ii) in the case of the Profit and Loss Account, of the profit of the
company for the year ended on that date and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
company for the year ended on that date.
5. On the basis of the written representations received from the
Directors as on 31 March, 2011 taken on record by the Board of
Directors, none of the Directors is disqualified as on 31 March, 2011
from being appointed as a director in terms of Section 274(1)(g) of the
Companies Act, 1956.
Annexure to the Auditors Report
(Referred to in paragraph 3 of our report of even date)
(i) Having regard to the nature of the companys business/
activities/result, clauses 4(ii), 4(viii), 4(x), 4(xiii), 4(xiv) and
4(xx) of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) The Fred assets disposed of during the year, in our opinion, do not
constitute a substantial part of the fixed assets of the company and
such disposal has, in our opinion, not affected the going concern
status of the company.
(iii) In respect of loans, secured or unsecured, granted by the Company
to companies, firms or other partes covered in the Register under
Section 301 of the Companies Act, 1956, according to the information
and explanations given to us:
(a) The Company has granted loans to two subsidiaries aggregating to
Rs.4188.00 lakhs. At the year-end, the balance due from one company
amounted to Rs.304 lakhs while the dues from another company was fully
received before the year end. The maximum amount involved during the
year was Rs.2282.60 lakhs (number of partes - two).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the company.
(c) While one subsidiary has settled its dues during the year, the dues
from the other company has become doubtful and has been fully provided
for.
(d) There were no overdue amounts remaining outstanding as at the year
end except the loan referred in (c) above.
In respect of loans, secured or unsecured, taken by the company from
companies, firms or other partes covered
in the Register maintained under Section 301 of the Companies Act,
1956, according to the information and explanations given to us:
(a) The Company has taken loans aggregating Rs.3270 lakhs from one
party during the year. At the year-end, the outstanding balance of such
loans taken aggregated Rs. NIL and the maximum amount involved during
the year was Rs.1940 lakhs (number of partes - One).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The payments of principal amounts and interest in respect of such
loans are regular/as per stipulations.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the company and the nature of its business with regard
to purchases of fixed assets and the sale of repossessed automobile
assets and services. During the course of our audit, we have not
observed any major weakness in such internal control system. The
Company does not purchase inventory nor does it sell any goods (other
than repossessed automobile assets) in the ordinary course of its
business.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs.5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time.
(vi) In our opinion and according to the information and explanations
given to us, the company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the Companies (Acceptance of Deposits) Rules, 1975, as
applicable to the
company, with regard to the deposits accepted from the public prior to
November 1, 2006. However, in respect of overdue amounts totalling to
Rs.1.86 lakhs, payments have not made since the repayment of the same
to the depositors has been stayed by the Madras High Court. Further,
in respect of overdue amounts totalling to Rs.0.11 lakhs, payments have
not been made as per instructions received from the Central Bureau of
Investigation. Other than the above, according to the information and
explanations given to us, no order has been passed by the company Law
Board or the National company Law Tribunal or the Reserve Bank of India
or any Court or any other Tribunal.
(vii) In our opinion, the internal audit functions carried out during
the year by the companys internal audit department as well as an
external firm of Chartered Accountants appointed by the Management,
have been commensurate with the size of the company and the nature of
its business.
(viii) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Income-tax, Sales Tax, Value Added Tax, Wealth Tax, Service Tax, Cess
and other material statutory dues applicable to it with the appropriate
authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Wealth Tax, Custom Duty, Cess and other material statutory dues in
arrears as at 31 March, 2011 for a period of more than six months from
the date they became payable except for fixed deposit amounts totalling
to Rs.1.97 lakhs which have not been credited to Investor Education and
Protection Fund since the repayment to the depositors has been stayed
by the Madras High Court for an amount of Rs. 1.86 lakhs, payments have
not been made pursuant to instructions received from Central Bureau of
Investigation for an amount of Rs.0.11 lakhs.
(c) Details of dues of Income-tax, Sales Tax, Wealth Tax, Service Tax
and Cess which have not been deposited as on 31 March, 2011 on account
of disputes are given below:
Statute Nature of Forum where Dispute Period to which
Dues is pending the amount relates
(Financial Year)
Income Tax
Act, 1961 Tax and Commissioner of
Income Tax 2000-01,2005-06
Interest (Appeals) and 2006-07
Tamil Nadu
General Sales
Tax Act, 1959 Sales Tax Sales Tax
Appellate
Tribunal 1994-95 228.59
Central
Sales Tax
Act, 1956 Sales Tax Sales Tax
Appellate
Tribunal 1994-95 59.77
Bihar Finance
Act, 1981 Sales Tax Sales Tax
Appellate
Tribunal 1992-93 and 1993-94
Gujarat Sales
Tax Act, 1969 Sales Tax Sales Tax
Tribunal 1996-97 and 1997-98
Karnataka Sales
Tax Act, 1957 Sales Tax Sales Tax
Appellate
Tribunal 1992-93 to 1994-95,
1996-97 and 1999-00
Delhi Sales
Tax Act, 1975 Sales Tax Sales Tax
Appellate
Tribunal 1990-91
Sales Tax Deputy
Commissioner of 1991-92 to 1998-99
U.P Trade Tax
Act, 1948 Trade Tax
Service Tax
(Chapter V
of the Service Madras High Court 2001-02 and 2002-03
Finance Act, Tax
1994)
Statute Amount involved (Rs. in lakhs)
Income Tax Act, 1961 432.54
Tamil Nadu General Sales 228.59
Tax Act, 1959
Central Sales Tax Act, 1956 59.77
Bihar Finance Act, 1981 2.19
Gujarat Sales Tax Act, 1969 2.03
Karnataka Sales Tax Act, 1957 19.79
Delhi Sales Tax Act, 1975 7.58
U.P Trade Tax Act, 1948 9.11
Service Tax (Chapter V of the 69.33
Finance Act, 1994)
(ix) In our opinion and according to the information and explanations
given to us, the company has not defaulted in the repayment of dues to
banks and debenture holders.
(x) In our opinion, the company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xi) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
company for loans taken by others from banks and financial institutions
are not prima facie prejudicial to the interests of the company.
(xii) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained, other than temporary deployment pending
application.
(xiii) On the basis of review of Asset / Liability Gap Analysis report,
giving utilisation of funds on overall basis and the related
information made available to us and as per the explanation given to
us, we report that funds raised on short term basis have, prima facie,
not been used during the year for long term investment.
(xiv) According to the information and explanations given to us, the
company has not made preferential allotment of shares to partes and
companies covered in the Register maintained under Section 301 of the
Companies Act, 1956.
(xv) According to the information and explanations given to us, during
the period covered by our audit report, the company had issued 7200
debentures of Rs.10 lakh each. The Company has created security in
respect of the debentures issued.
(xvi) To the best of our knowledge and according to the information and
explanations given to us, no fraud by the company and no material fraud
on the company has been noticed or reported during the year.
For Deloite Haskins & Sells
Chartered Accountants
(Registration No.008072S)
M.K.Ananthanarayanan
Partner
(Membership No.19521)
Chennai
30 April, 2011
Mar 31, 2010
1. We have audited the attached Balance Sheet of CHOLAMANFALAM DBS
FINANCE LIMITED (Ãthe CompanyÃ) as at 31 March, 2010, the Profit and
Loss Account and the Cash Flow Statement of the Company for the year
ended on that date, both annexed thereto. These financial statements
are the responsibility of the CompanyÃs Management. Our responsibility
is to express an opinion on these financial statements based on our
audit.
2. We conducted our audit in accordance with the 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 misstatements. An audit
includes examining, on a test basis, evidence supporting the amounts
and the disclosures in the financial statements. An audit also includes
assessing the accounting principles used and the 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 (AuditorÃs Report) Order, 2003 (CARO)
issued by the Central Government in terms of Section 227(4A) 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. Further to our comments in the Annexure referred to in paragraph 3
above, we report as follows:
(a) 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;
(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 Profit and Loss Account and the
Cash Flow Statement dealt with by this report are in agreement with the
books of account;
(d) in our opinion, the Balance Sheet, the Profit and Loss Account and
the Cash Flow Statement dealt with by this report are in compliance
with the Accounting Standards referred to in Section 211(3C) of the
Companies Act, 1956;
(e) 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:
(i) in the case of the Balance Sheet, of the state of affairs of the
Company as at 31 March, 2010;
(ii) in the case of the Profit and Loss Account, of the profit of the
Company for the year ended on that date; and
(iii) in the case of the Cash Flow Statement, of the cash flows of the
Company for the year ended on that date.
5. On the basis of the written representations received from the
Directors as on 31 March, 2010 taken on record by the Board of
Directors, none of the Directors is disqualified as on 31 March, 2010
from being appointed as a director in terms of Section 274(1)(g) of the
Companies Act, 1956.
Annexure to the Auditorsà report (referred to in paragraph 3 of our
report of even date)
(i) Having regard to the nature of the CompanyÃs
business/activities/result, clauses 4(ii), 4(viii), 4(xiii), 4(xiv) and
4(xx) of CARO are not applicable.
(ii) In respect of its fixed assets:
(a) The Company has maintained proper records showing full particulars,
including quantitative details and situation of the fixed assets.
(b) The fixed assets were physically verified during the year by the
Management in accordance with a regular programme of verification
which, in our opinion, provides for physical verification of all the
fixed assets at reasonable intervals. According to the information and
explanation given to us, no material discrepancies were noticed on such
verification.
(c) The fixed assets disposed off during the year, in our opinion, do
not constitute a substantial part of the fixed assets of the Company
and such disposal has, in our opinion, not affected the going concern
status of the Company.
(iii) A. In respect of loans, secured or unsecured, granted by the
Company to companies, firms or other parties covered in the Register
under Section 301 of the Companies Act, 1956, according to the
information and explanations given to us:
(a) The Company has granted loans aggregating Rs.10,220 lakhs to two
parties during the year. At the year-end, the outstanding balances of
such loans aggregated Rs.377 lakhs (number of parties - One) and the
maximum amount involved during the year was Rs.10,220 Lakhs (number of
parties - 2).
(b) The rate of interest and other terms and conditions of such loans
are, in our opinion, prima facie not prejudicial to the interests of
the Company.
(c) The receipts of principal amounts and interest have been regular/as
per stipulations.
(d) There were no overdue amounts remaining outstanding as at the year
end.
B. The Company has not taken any loans, secured or unsecured, from
companies, firms or other parties listed in the Register maintained
under Section 301 of the Companies Act, 1956.
(iv) In our opinion and according to the information and explanations
given to us, there is an adequate internal control system commensurate
with the size of the Company and the nature of its business with regard
to purchases of fixed assets and the sale of repossessed automobile
assets and for rendering of services. During the course of our audit,
we have not observed any continuing failure to correct major weakness
in such internal control system. The Company does not purchase
inventory nor does it sell any goods (other than repossessed automobile
assets) in the ordinary course of its business.
(v) In respect of contracts or arrangements entered in the Register
maintained in pursuance of Section 301 of the Companies Act, 1956, to
the best of our knowledge and belief and according to the information
and explanations given to us:
(a) The particulars of contracts or arrangements referred to Section
301 that needed to be entered in the Register maintained under the said
Section have been so entered.
(b) Where each of such transaction is in excess of Rs.5 lakhs in
respect of any party, the transactions have been made at prices which
are prima facie reasonable having regard to the prevailing market
prices at the relevant time except in respect of certain services
availed/provided by the Company, no comparison of prices could be made
as the Company informed us that comparable quotations are not available
and in respect of which we are unable to comment.
(vi) In our opinion and according to the information and explanations
given to us, the Company has complied with the provisions of Sections
58A and 58AA or any other relevant provisions of the Companies Act,
1956 and the Companies (Acceptance of Deposits) Rules, 1975 as
applicable to the Company, with regard to the deposits accepted from
the public prior to 1 November, 2006. However, in respect of overdue
amounts totalling to Rs.1.86 lakhs, payments have not been made since
the repayment of the same to the depositors has been stayed by the
Madras High Court. Further, in respect of overdue amounts totalling to
Rs.0.11 lakhs, payments have not been made as per instructions received
from the Central Bureau of Investigation. Other than the above,
according to the information and explanations given to us, no order has
been passed by the Company Law Board or the National Company Law
Tribunal or the Reserve Bank of India or any Court or any other
Tribunal.
(vii) In our opinion, internal audit functions carried out during the
year by the CompanyÃs internal audit department as well as an external
agency appointed by the Management have been commensurate with the size
of the Company and the nature of its business.
(viii) According to the information and explanations given to us in
respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed
dues, including Provident Fund, Investor Education and Protection Fund,
Employeesà State Insurance, Income-tax, Sales Tax, Value Added Tax,
Wealth Tax, Service Tax, Cess and other material statutory dues
applicable to it with the appropriate authorities.
(b) There were no undisputed amounts payable in respect of Income-tax,
Wealth Tax, Cess and other material statutory dues in arrears as at 31
March, 2010 for a period of more than six months from the date they
became payable except for fixed deposit amounts totalling to Rs.1.97
lakhs which have not been credited to the Investor Education and
Protection Fund since the repayment to the depositors has been stayed
by the Madras High Court for an amount of Rs.1.86 lakhs, payments have
not been made pursuant to instructions received from Central Bureau of
Investigation for an amount of Rs.0.11 lakhs.
(c) Details of dues of Income-Tax, Sales Tax, Wealth Tax, Service Tax
and Cess which have not been deposited as on 31 March, 2010 on account
of disputes are given below:
Statute Nature of Dues Forum where
Dispute is pending
Income Tax Act, Tax and Interest Commissioner of Income
1961 Tax (Appeals)
Tamil Nadu
General Sales Tax Sales Tax Appellate Tribunal
Sales Tax Act,
1959
Karnataka
Sales Tax Sales Tax Sales Tax Appellate Tribunal
Act, 1957
Central
Sales Tax Central Sales Tax Sales Tax Appellate Tribunal
Act, 1956
Delhi Sales Tax Sales Tax Assistant Commissioner,
Act, 1975 Appeals
Bihar Finance Act, Sales Tax Sales Tax Appellate Tribunal
1981
Gujarat Sales
Tax Sales Tax Sales Tax Appellate Tribunal
Act, 1969
Service Tax
(Chapter Service Tax Madras High Court
V of the Finance Act,
1994)
Statue Period to which Amount involved
the amount relates (rs. in lakhs)
- Financial year
Income Tax Act,
1961 1997-98 120.38
2000-01 473.94
2001-02 51.83
2003-04 4.99
2005-06 75.98
Tamil Nadu General
Sales Tax Act, 1959 1994-95 228.59
Karnataka Sales Tax
Act, 1957 1992-93 to 23.74
1994-95, 1996-97
and 1999-2000
Central Sales Tax
Act, 1956 1994-95 and 70.92
1995-96
Delhi Sales Tax
Act, 1975 1990-91 7.58
1992-93 and 2.19
Bihar Finance Act,
1981 1993-94
Gujarat Sales Tax
Act, 1969 1996-97 and 2.03
1997-98
Service Tax (Chapter
V of the Finance Act,
1994) 2001-02 and 69.33
2002-03
(ix) The company does not have any accumulated losses as at 31 March,
2010 and has not incurred cash losses in the financial year and in the
immediately preceding financial year.
(x) In our opinion and according to the information and explanations
given to us, the Company has not defaulted in the repayment of dues to
banks, and debenture holders. The Company has not taken any loans from
financial institutions.
(xi) In our opinion, the Company has maintained adequate records where
it has granted loans and advances on the basis of security by way of
pledge of shares, debentures and other securities.
(xii) In our opinion and according to the information and explanations
given to us, the terms and conditions of the guarantees given by the
Company for loans taken by others from banks are not prima facie
prejudicial to the interests of the Company.
(xiii) In our opinion and according to the information and explanations
given to us, the term loans have been applied for the purposes for
which they were obtained, other than temporary deployment pending
application.
(xiv) According to the information and explanations given to us and on
the basis of maturity profile of assets and liabilities with a maturity
profile of one year, as given in the Asset Liability Management Report,
assets maturing in the next one year are in excess of the liabilities
of similar maturity by Rs.6,067 Lakhs.
(xv) According to the information and explanations given to us, the
Company has not made preferential allotment of shares to parties and
companies covered in the Register maintained under Section 301 of the
Companies Act, 1956.
(xvi) According to the information and explanations given to us, during
the period covered by our audit report, the Company had issued 2800
secured debentures of Rs.10 Lakh each. The Company has created
security in respect of the debentures issued.
(xvii) To the best of our knowledge and according to the information
and explanations given to us, no fraud by the Company and no material
fraud on the Company has been noticed or reported during the year
although there were some instances of loans becoming doubtful/loss
assets consequent to fraudulent misrepresentation by borrowers/others
which were noticed by the Management, the amounts whereof were not
material in the context of the size of the Company and the nature of
its business and the outstanding amounts of such loans were adequately
provided for.
For Deloitte haskins & sells
Chartered Accountants
(Registration No.008072S)
M. k. Ananthanarayanan
April 26, 2010 Partner
Chennai (Membership No.19521)