Mar 31, 2023
To the Members of Manappuram Finance Limited
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 (ICAI) 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 obtained by us is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw your attention to Note 74 in the standalone financial statements in relation to show cause notice received from Reserve Bank of India (RBI) with respect to certain matters highlighted in the Annual Inspection report for Financial Year ended on March 31, 2021 and explained in the note. Penalties, if any, that may be imposed on the Company by RBI in this regard and the impact thereon on the standalone financial statements is currently unascertainable.
Our opinion is not modified with respect to this matter.
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended 31st March, 2023 (current year). 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.
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Manappuram Finance Limited ("the Companyâ), which comprise the Balance Sheet as at 31st March, 2023, the Statement of Profit and Loss (Including Other Comprehensive Income), Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone 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 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 Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 ("Ind ASâ) as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31st March, 2023, and profit, changes in equity and its cash flows for the year ended on that date.
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
Sr. No |
Key Audit Matter |
How the Key Audit Matter was addressed in our audit |
1 |
Interest Income on Gold Loans: |
Our audit procedures in respect of this matter included the following but |
Interest Income on Gold Loan as at 31st March, 2023: '' 39,903.31 |
not limited to: |
|
millions |
Obtained an understanding of management''s process, systems/ |
|
Refer note 27(i) to the standalone financial statements |
applications and controls implemented on in relation to computation |
|
Interest Income on Gold Loan is based on the various gold loan |
& recognition of interest income on gold loans. |
|
schemes provided by the Company which is netted off against the rebates & discounts given for prompt or early payments. The calculation of the rebates & discount amounts netted off against the interest income involve complexities on account of descretion & managment judgement which is dependent upon the timing and |
Evaluated and validated the design, implementation and operating |
|
effectiveness of key internal financial controls pertaining to the recognition of the various gold loan schemes and interest income thereon, including rebates & discounts. |
||
period of repayment under the different schemes. Penal interest charged on account of delay payments dependent on the nature & period of delay and hence subject to judgement. |
The entire computation of interest income is automated and system |
|
driven. We have performed the following audit procedure with respect to around interest income on gold loans: |
||
Considering the significance of interest income on gold loans and the above factors we have considered Interest Income on gold loan as Key Audit Matter |
i. Selected samples and verified accuracy of interest income under various gold loans schemes by performing recomputation. |
Sr. No |
Key Audit Matter |
How the Key Audit Matter was addressed in our audit |
|
ii. SeLected sampLes of continuing and new goLd Loan schemes and tested the operating effectiveness of the internaL control reLating to interest income computation. We aLso carried out a combination of procedures invoLving inquiry, and observation and inspection of evidence in respect of operation of these controLs. iii. Performed anaLyticaL procedures and test of detaiLs procedures for testing the accuracy and compLeteness of revenue recognized. iv. Tested the reLevant IT generaL controLs around access and change management reLating to interest income computation and reLated information used in interest computation. v. Obtained the List of modifications made in the interest scheme master during the year and verified the same on test check basis. vi. Assessed the appropriateness, accuracy and adequacy of reLated presentation and discLosures in accordance with the appLicabLe accounting standards. |
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2 |
Provision for Expected Credit Losses (ECL) on Loans: |
Our audit procedures in respect of this matter incLuded the foLLowing, |
|
Total Gross Loans as at 31st March, 2023: '' 247,345. 68 millions |
but not Limited to: |
||
Impairment Provision as at 31st March, 2023: '' 1,761.66 millions Refer note 10 to the standalone financial statements In accordance with IND AS 109, the Company applies expected credit Losses (ECL) model for measurement and recognition of |
⢠|
Examined poLicies approved by the Board of Directors for computation of ECL that addresses procedures and controLs for assessing and measuring credit risk on aLL Lending exposures commensurate with the size, compLexity and risk profiLe specific to the Company. |
|
impairment Loss on the Loans assets. Significant judgements are used in cLassifying Loan assets and appLying appropriate measurement principles. The allowance for expected credit Losses ("ECL") involves a significant Level of management judgement and estimation uncertainty in the foLLowing key areas: Assessesing whether there has been a significant increase in credit risk for exposures since its initiaL recognition by comparing the risk of defauLt occurring over the expected |
⢠|
EvaLuated & vaLidated the design and operating effectiveness of controLs across the processes reLevant to aLLowance for ECL. These controLs, among others, incLuded controLs over the aLLocation of assets into stages incLuding management''s monitoring of stage effectiveness, modeL monitoring incLuding the need for post modeL adjustments, modeL vaLidation, credit monitoring, individuaL/ coLLective provisions and production of journaL entries and discLosures. |
|
Life of the asset between the date of initiaL recognition and the reporting date, which invoLves estimation uncertanity in computing the defauLt risk over Life of the assets which is |
⢠|
Verified the compLeteness of Loans incLuded in the Expected Credit Loss caLcuLations as of 31st March, 2023. |
|
LikeLy to be more than one year. CLassification of Loan assets to stage 1, 2, or 3 using criteria in accordance with Ind AS 109 where no significant increase in credit risk has been observed, such assets are cLassified |
⢠|
SeLected sampLes & verified appropriateness of cLassification of Loan assets in stage 1, 2 and 3 in accordance with the poLicy approved by the Board of Directors. |
|
in "Stage 1", Loans that are considered to have significant increase in credit risk are not credit impaired are considered to be in "Stage 2" and those which are in defauLt or for which there is an objective evidence of impairment are considered to be in "Stage 3". Such cLassification requires significant management judgements due to the nature of Loan assets |
⢠|
SeLected sampLes of exposure and verified the appropriateness of determining Exposure at DefauLt (EAD), PD and LGD. Further, aLso checked the appropriateness of information used in the estimation of the ProbabiLity of DefauLt ("PD") and Loss given DefauLt ("LGD") for the different stages depending on the nature of the portfoLio. |
|
and assessment required thereon. Determination of Exposures at DefauLt ("EAD"), probability of defauLts (PD) and estimation of Loss given defauLts (LGD). |
⢠|
Performed an overaLL assessment of the ECL provision LeveLs at each stage. |
|
The probabiLity of defauLt for the pooLs are computed based on the historicaL trends, adjusted with any forward Looking factors which is subject to estimation ncertainty. SimiLarLy the Company computes the Loss Given DefauLt based on the recovery rates as estimated by management. Considering the above, aLLowance for Expected Credit Loss on Loan Assets requires a high degree of judgement and estimation uncertainty, with a potentiaL range of outcomes which have a significant impact on the financiaL statements. AccordingLy, we have determined Provision for Expected Credit Losses (ECL) on Loans as Key Audit Matter. |
⢠|
Assessed the adequacy and appropriateness of discLosures in compLiance with the Ind AS 107 in reLation to ECL especiaLLy in reLation to judgements used in estimation of ECL provision. |
Sr. No |
Key Audit Matter |
How the Key Audit Matter was addressed in our audit |
|
3 |
Information Technology ("ITâ) Systems and Controls |
Our audit procedures with respect to this matter included the following, but were not limited to the following: |
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The Company has a complex IT system to support its recording of customer''s operational data, business processes, ensuring complete and accurate processing of financial transactions and supporting the overall internal control framework. |
⢠|
Involved IT specialists as part of the audit for the purpose of |
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testing the IT general controls and application controls (automated |
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and semiautomated controls) to determine the accuracy of the |
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information produced by the Company''s IT systems; |
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In particular, the IT system is used for recording all disbursements |
⢠|
Obtained a comprehensive understanding of IT applications |
|
and collections, identification and tagging of pledged loans to |
landscape implemented at the Company. It was followed by |
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customers and calculating interest income and overdue days. |
process understanding, mapping of applications to the same and understanding financial risks posed by people-process and |
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The Company''s accounting and financial reporting processes are |
technology; |
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dependent on automated controls enabled by IT systems which impacts key financial accounting and reporting items such as |
⢠|
Tested design and operating effectiveness of key controls operating |
|
loans, interest income, impairment on loans amongst others. |
over user access management, change management, computer operations (which includes testing of key controls pertaining to, |
||
The reliability and security of IT systems play a key role in the |
backup and incident management and data centre security), System |
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business operation. The controls implemented by the Company in |
interface controls. This included testing that requests for access to |
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its IT environment determine the integrity, accuracy, completeness |
systems were appropriately logged, reviewed, and authorized. |
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and validity of data that is processed by the applications and is |
⢠|
Tested the design and operating effectiveness of certain automated |
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ultimately used for financial reporting. |
controls, that were considered as key internal system controls over financial reporting were tested. Using various techniques such as |
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Accordingly, we have identified ''IT systems and controls'' as key |
inquiry, review of documentation / record / reports, observation, and |
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audit matter because of the high level automation, significant |
re-performance. We also tested few controls using negative testing |
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number of systems being used by the management and the complexity of the IT architecture and its impact on the financial |
technique; |
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reporting system. |
⢠|
Tested compensating controls and performed alternate procedures, where necessary. In addition, understood where relevant, changes made to the IT landscape during the audit period. |
Information Other than the Standalone Financial Statements and Auditor''s Report thereon
Responsibilities of Management and Those Charged with Governance for the Standalone Financial Statements
The Company''s Management and Board of Directors are 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 statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors are responsible for assessing the Company''s ability to
continue as a going concern, disclosing, as applicable, matters
The Company''s Management and Board of Directors are responsible for the other information. The other information comprises of Director''s Report including annexures to the Director''s Report which is included in the Annual Report but does not include the standalone financial statements and our auditor''s report thereon. The Annual Report is expected to be made available to us after the date of this auditor''s report.
Our opinion on the standalone financial statements does not cover the other information and we do not and will 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 identified above when it becomes available 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
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate the matter to those charged with governance under SA 720 ''The Auditor''s responsibilities Relating to Other Information''.
related to going concern and using the going concern basis of accounting unless the Board of Directors 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
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.
As part of an audit in accordance with SAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
I dentify 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.
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 financial statements for the year ended 31st March, 2023 (current year) 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,
2020 ("the Orderâ), issued by the Central Government of India in terms of sub-section (11) of section 143 of the Act, we give in "Annexure Aâ a statement on the matters specified in paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and 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 Flow dealt with by this Report are in agreement with the books of account.
(d) I n 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 31st March, 2023 taken on record by the Board of Directors, none of the directors are disqualified as on 31st March, 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 Bâ.
(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
standalone financial statements - Refer Note 23 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses
- Refer Note 76 to the standalone financial statements.
iii. The Company has transferred '' 4.59 millions of Unclaimed dividend to the Investor Education and Protection Fund during the financial
year 2022-23.
iv. (1) The Management has represented that,
to the best of its knowledge and belief, as disclosed in Note 64B(i) to the standalone financial statements,, 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 Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries.
(2) The Management has represented that, to the best of it''s knowledge and belief, as disclosed in Note 64B(ii) to the standalone financial statements, no funds have been received by the Company from any person(s)/entity(ies), including foreign entities ("Funding Partiesâ), that the Company has 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 Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries; and
(3) Based on such audit procedures performed, as considered reasonable and appropriate in the circumstances, nothing has come to our attention that causes us to believe that the management representations under sub-clauses (1) and (2) above contain any material misstatement.
v. The Company has declared and paid dividend during the year which is in compliance with section 123 of the Act.
vi. As the proviso to Rule 3(1) of the Companies (Accounts) Rules, 2014 (as amended), which provides for the accounting software used by the Company for maintaining its books of account to have the feature for recording of audit trail (edit log) facility and related matters, is applicable for the Company only with effect from financial year beginning 1 April 2023, the reporting under clause (g) of Rule 11 is currently not applicable.
3. In our opinion, according to information, explanations given
to us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.
Mar 31, 2022
Report on the Audit of the Standalone Financial Statements OPINION
We have audited the standalone financial statements of Manappuram Finance Limited ("the Companyâ), which comprise the Balance Sheet as at March 31, 2022, and the Statement of Profit and Loss, Statement of Changes in Equity and Statement of Cash Flows for the year then ended, and notes to the standalone 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 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 Indian Accounting Standards prescribed under section 133 of the Act read with Companies (Indian Accounting Standards) Rules, 2015 as amended and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2022, and profit, changes in equity and its cash flows for the year ended on that date.
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 (ICAI) 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.
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the standalone financial statements for the year ended March 31, 2022 (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.
Sr. Key Audit Matter No |
How the Key Audit Matter was addressed in our audit |
1. Interest Income on Gold Loans: |
We assessed the Company''s process on interest income |
Interest in Gold Loan is based on the various gold loan |
computation. |
schemes launched by the Company. The calculation of |
Our audit approach consisted testing of the design and operating |
the interest on gold loan as per the applicable scheme |
effectiveness of the internal controls and substantive testing as |
involves complexities, including rebates in the nature of reduced prospective interest rates for prompt payment and penal interest for delayed payment. Due to such variety of schemes and involvement of complexity in calculating the interest income on gold |
follows: Since the entire interest computation is system driven, we tested, Evaluated the design of internal controls relating to interest income computation. |
loan we have considered this as Key Audit Matter. |
Selected a sample of continuing and new gold loan schemes and tested the operating effectiveness of the internal control, relating to interest income computation. We carried out a combination of procedures involving inquiry and observation, inspection of evidence in respect of operation of these controls. Performed analytical procedures and test of details procedures for testing the accuracy of the revenue recorded. Tested the relevant information technology systems'' access and change management controls relating to interest income computation and related information used in interest computation. Obtained the list of modifications made in the interest scheme master during the year and test checked the same on sample basis. |
Sr. No |
Key Audit Matter |
How the Key Audit Matter was addressed in our audit |
2. |
Provision for Expected Credit Losses (ECL) on Loans: |
We examined Board Policy approving methodologies for |
Management estimates impairment provision using Expected Credit loss model for the loan exposure. Measurement of loan impairment involves application of significant judgement by the management. The most |
computation of ECL that address policies, procedures and controls for assessing and measuring credit risk on all lending exposures, commensurate with the size, complexity and risk profile specific to the Company. |
|
significant judgements are: |
We evaluated the design and operating effectiveness of controls |
|
Timely identification and classification of the impaired |
across the processes relevant to ECL. |
|
loans, and |
These controls, among others, included controls over the allocation |
|
Determination of probability of defaults (PD) and estimation of loss given defaults (LGD) based on the value of collaterals and relevant factors |
of assets into stages including management''s monitoring of stage effectiveness, model monitoring including the need for post model adjustments, model validation, credit monitoring, individual/ collective provisions and production of journal entries and |
|
The estimation of Expected Credit Loss (ECL) on |
disclosures. |
|
financial instruments involve significant judgements and estimates. Following are points with increased level of audit focus: |
We tested the completeness of loans included in the Expected Credit Loss calculations as of 31 March 2022. |
|
Classification of assets to stage 1, 2, or 3 using criteria in accordance with Ind AS 109 which also include |
We tested assets in stage 1, 2 and 3 on sample basis to verify that they were allocated to the appropriate stage. |
|
considering the impact of recent RBI''s Covid-19 |
For samples of exposure, we tested the appropriateness of |
|
regulatory circulars; |
determining Exposure at Default (EAD), PD and LGD. |
|
Accounting interpretations, modelling assumptions and |
We performed an overall assessment of the ECL provision levels |
|
data used to build and run the models; |
at each stage including management''s assessment on Covid-19 |
|
Measurement of individual borrowers'' provisions including Covid-19 impact assessment of multiple economic scenarios; |
impact to determine if they were reasonable considering the Company''s portfolio, risk profile, credit risk management practices and the macroeconomic environment. |
|
Inputs and Judgements used in determination of management overlay at various asset stages considering the current uncertain economic environment arising out of the COVID 19 Pandemic and |
We assessed the adequacy and appropriateness of disclosures in compliance with the Ind AS 107 in relation to ECL especially in relation to judgements used in estimation of ECL provision. |
|
The disclosures made in the financial statements for ECL especially in relation to judgements and estimates by the Management in determination of the ECL. Refer note 45 to the standalone financial statements |
INFORMATION OTHER THAN THE STANDALONE FINANCIAL STATEMENTS AND AUDITOR''S REPORT THEREON
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 financial statements and our auditor''s report thereon. The Annual Report is expected to be made available to us after the date of this auditor''s report.
Our opinion on the financial statements does not cover the other information and we will 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 identified above when it becomes available 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.
When we read the Annual Report, if we conclude that there is a material misstatement therein, we are required to communicate
the matter to those charged with governance under SA 720 ''The Auditor''s responsibilities Relating to Other Information''.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR THE STANDALONE 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 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 Indian 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 statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
In preparing the standalone financial statements, the Board of Directors 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 the Board of Directors 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
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.
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 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 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 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.
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 financial statements for the year ended March 31, 2022 (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.
The Ind AS financial statements of the Company for the year
ended March 31, 2021, were audited by another auditor whose
report dated May 26, 2021 expressed an unmodified opinion on
those statements.
Our opinion is not modified in respect of this matters.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
1. As required by the Companies (Auditor''s Report) Order, 2020
("the Orderâ), issued by the Central Government of India in
terms of sub-section (11) of section 143 of the Act, we give
in "Annexure Aâ a statement on the matters specified in
paragraphs 3 and 4 of the Order, to the extent applicable.
2. As required by Section 143(3) of the Act, we report that:
(a) We have sought and obtained all the information and 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, the Statement of Changes in Equity and the Statement of Cash Flow dealt with by this Report are in agreement with the books of account.
(d) I n our opinion, the aforesaid standalone financial
statements comply with the Indian 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, 2022 taken on record by the Board of Directors, none of the directors are 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 B".
(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 standalone financial statements - Refer Note 23 to the standalone financial statements;
ii. The Company did not have any long-term contracts including derivative contracts for which there were any material foreseeable losses;
iii. There were no amounts which were required to be transferred to the Investor Education and Protection Fund by the Company;
iv. (1) Under Rule 11(e)(i)
The Management has represented that, to the best of it''s 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 ("Intermediariesâ), with the understanding, whether recorded in writing or otherwise, that the Intermediary shall, directly or indirectly lend or invest in other persons or entities identified in any manner whatsoever by or on behalf of the Company ("Ultimate Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(2) Under Rule 11(e)(ii)
The Management has represented, that, to the best of it''s 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, as on the date of this audit report, that the Company shall, 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 Beneficiariesâ) or provide any guarantee, security or the like on behalf of the Ultimate Beneficiaries;
(3) Under Rule 11(e)(iii)
Based on the audit procedures performed that have been considered reasonable and appropriate in the circumstances, and according to the information and explanations provided to us by the Management in this regard nothing has come to our notice that has caused us to believe that the representations under subclause (i) and (ii) of Rule 11(e) as provided under (1) and (2) above, contain any material mis-statement.
v. The Company has declared and paid dividend during the year which is in compliance with Section 123 of the Act.
5. As required by The Companies (Amendment) Act, 2017, in our opinion, according to information, explanations given to
us, the remuneration paid by the Company to its directors is within the limits laid prescribed under Section 197 of the Act and the rules thereunder.
Mar 31, 2021
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 (ICAI) 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 made thereunder, and we have fulfilled our other ethical responsibilities in accordance with these requirements and the ICAI''s Code of Ethics. 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.
To The Members of Manappuram Finance Limited Report on the Audit of the Standalone Financial Statements
Opinion
We have audited the accompanying standalone financial statements of Manappuram Finance Limited (the "Companyâ), which comprise the Balance Sheet as at 31 March 2021, and the Statement of Profit and Loss (including Other Comprehensive Income), the Cash Flow Statement and the Statement of Changes in Equity for the year then ended, and 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 financial statements give the information required by the Companies Act, 2013 (the "Actâ) in the manner so required and give a true and fair view in conformity with the Indian Accounting Standards prescribed under section 133 of the Act read with the Companies (Indian Accounting Standards) Rules, 2015, as amended, ("Ind ASâ) and other accounting principles generally accepted in India, of the state of affairs of the Company as at 31 March 2021, and its profit, total 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 financial statements in accordance with the Standards on Auditing specified under section 143(10) of the Act (SAs). Our responsibilities under those Standards are further described in the Auditor''s Responsibility
for the Audit of the Standalone Financial Statements section
We draw attention to Note 7 to the standalone financial statements, which fully describes that the Company has recognised impairment on financial assets to reflect the adverse business impact and uncertainties arising from the COVID 19 pandemic. Such estimates are based on current facts and circumstances and may not necessarily reflect the future uncertainties and events arising from the full impact of the COVID 19 pandemic.
Our opinion and conclusion 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 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.
Sr. No. |
Key Audit Matter |
Auditor''s Response |
1 |
Interest in Gold Loan is based on the various gold loan schemes launched by the Company. The calculation of the interest on gold loan as per the applicable scheme involves complexities, including rebates in the nature of reduced prospective interest rates for prompt payment and penal interest for delayed payment. Due to such variety of schemes and involvement of complexity in calculating the interest income on gold loan we have considered this as Key Audit Matter. |
Principle Audit Procedures: We assessed the Company''s process on interest income computation. Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: Since the entire interest computation is system driven, we tested, ⢠Evaluated the design of internal controls relating to interest income computation. ⢠Selected a sample of continuing and new gold loan schemes and tested the operating effectiveness of the internal control, relating to interest income computation. We carried out a combination of procedures involving inquiry and observation, inspection of evidence in respect of operation of these controls. |
Sr. No. |
Key Audit Matter |
Auditor''s Response |
⢠Tested the relevant information technology systems'' access and change management controls relating to interest income computation and related information used in interest computation. |
||
⢠Obtained the list of modifications made in the interest scheme master during the year and test checked the same on sample basis. |
||
⢠Performed analytical procedures and test of details procedures for testing the accuracy of the revenue recorded. |
||
2 |
Provision for Expected Credit Losses (ECL) on |
Principle Audit Procedures: |
Loans Management estimates impairment provision using Expected Credit Loss model for the Loan exposure. Measurement of loan impairment involves application of significant judgement by the management. The most significant judgements are: TimeLy identification and cLassification of the impaired Loans, and Determination of probability of defaults (PD) and estimation of loss given defaults (LGD) based on the value of collaterals and relevant factors |
We examined Board Policy approving methodologies for computation of ECL that address policies, procedures and controls for assessing and measuring credit risk on all lending exposures, commensurate with the size, complexity and risk profile specific to the Company. We evaluated the design and operating effectiveness of controls across the processes relevant to ECL. These controls, among others, included controls over the allocation of assets into stages including management''s monitoring of stage effectiveness, model monitoring including the need for post model adjustments, model validation, credit monitoring, individual/collective provisions and production of journal entries and disclosures. |
|
The estimation of Expected Credit Loss (ECL) on financial instruments involve significant judgements and estimates. Following are points with increased level of audit focus: Classification of assets to stage 1, 2, or 3 using criteria in accordance with Ind AS 109 which also include considering the impact of recent RBI''s Covid-19 regulatory circulars; Accounting interpretations, modelling assumptions and data used to build and run the models; Measurement of individual borrowers'' provisions including Covid-19 impact assessment of multiple economic scenarios; Inputs and Judgements used in determination of management overlay at various asset stages considering the current uncertain economic environment arising out of the COVID 19 Pandemic and |
We tested the completeness of loans included in the Expected Credit Loss calculations as of 31 March 2021. We tested assets in stage 1, 2 and 3 on sample basis to verify that they were allocated to the appropriate stage. For samples of exposure, we tested the appropriateness of determining Exposure at Default (EAD), PD and LGD. We performed an overall assessment of the ECL provision levels at each stage including management''s assessment on Covid-19 impact to determine if they were reasonable considering the Company''s portfolio, risk profile, credit risk management practices and the macroeconomic environment. We assessed the adequacy and appropriateness of disclosures in compliance with the Ind AS 107 in relation to ECL especially in relation to judgements used in estimation of ECL provision. |
|
The disclosures made in the financial statements for ECL especially in relation to judgements and estimates by the Management in determination of the ECL. Refer note 45 to the standalone financial statements. |
Information Other than the Financial Statements and Auditor''s Report Thereon
Those Board of Directors are also responsible for overseeing
the Company''s financial reporting process.
Auditor''s Responsibility for the Audit of the Standalone Financial Statements
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.
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 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 financial 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 the 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
The Company''s Board of Directors is responsible for the other
information. The other information comprises the information included in the Management Discussion and Analysis, Board''s Report, Business Responsibility Report and Corporate Governance Report, but does not include the consolidated
financial statements, 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 during the course of our 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.
Management''s Responsibility for the Standalone Financial Statements
The Company''s Board of Directors is responsible for the
matters stated in section 134(5) of the Act with respect to the preparation of these standalone 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 Ind AS and other accounting principles generally accepted in India. 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 statement that give a true and fair view and are free from material misstatement, whether due to fraud or error.
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.
disclosures, and whether the standalone financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
e. On the basis of the written representations received from the directors as on 31 March 2021 taken on record by the Board of Directors, none of the directors is disqualified as on 31 March, 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 over financial reporting of the Company and the operating effectiveness of such controls, refer to our separate Report in "Annexure Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
g. With respect to the other matters to be included in the Auditor''s Report in accordance with the requirements of section 197(16) of the Act, as amended,
In our opinion and to the best of our information and according to the explanations given to us, the remuneration paid by the Company to its directors during the year is in accordance with the provisions of section 197 of 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 financial statements;
ii. The Company did not have any long-term contracts as at year-end including derivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor''s Report) Order,
2016 ("the Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
For Deloitte Haskins and Sells LLP
Chartered Accountants (Firm''s Registration No. 117366W/W-100018)
G. K. Subramaniam
(Partner)
Place: Mumbai (Membership No. 109839)
Date: 26th May, 2021 (UDIN: 21109839AAAAGC2044)
Materiality is the magnitude of misstatements in the standalone financial statements that, individually or in aggregate, makes it probable that the economic decisions of a reasonably knowledgeable user of the standalone financial statements may be influenced. We consider quantitative materiality and qualitative factors in (i) planning the scope of our audit work and in evaluating the results of our work; and (ii) to evaluate the effect of any identified misstatements in the standalone financial statements.
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 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
1. As required by Section 143(3) of the Act, based on our audit 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 Cash Flow Statement and Statement of Changes in Equity 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 Ind AS specified under Section 133 of the Act.
Mar 31, 2018
Independent Auditor''s Report
To The Members of MANAPPURAM FINANCE LIMITED
REPORT ON THE STANDALONE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of MANAPPURAM FINANCE LIMITED ("the Companyâ), which comprise the Balance Sheet as at March 31, 2018, 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 STANDALONE FINANCIAL STATEMENTS
The Company''s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 ("the 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 Standards prescribed under section 133 of the Act read with the Companies (Accounting Standards) Rules, 2006, as amended ("Accounting Standardsâ), and other accounting principles generally accepted in India.
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 anc 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.
AUDITOR''S 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 there under and the Order issued under section 143(11) of the Act.
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 auditor''s 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 Company''s preparation of the standalone financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company''s Directors, as well as evaluating the overall presentation of the standalone financial statements.
We believe that the audit evidence 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 Standards and other accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2018, 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 that:
a) We have sought and obtained all the information and explanations which to the best of our knowledge and belief were necessary for the purposes of our audit.
b) In our opinion, proper books of account as required by law have been kept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet, the Statement of Profit and Loss and the Cash Flow Statement dealt with by this Report are in agreement with the books of account.
d) 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 of the Company as on March 31, 2018 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 Aâ. Our report expresses an unmodified opinion on the adequacy and operating effectiveness of the Company''s internal financial controls over financial reporting.
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.
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.
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor''s Report) Order, 2016 ("the Orderâ) issued by the Central Government in terms of Section 143(11) of the Act, we give in "Annexure Bâ a statement on the matters specified in paragraphs 3 and 4 of the Order.
We have audited the internal financial controls over financial reporting of MANAPPURAM FINANCE LIMITED ("the Companyâ) 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 (the "Guidance Noteâ) issued by the Institute of Chartered Accountants of India (the "ICAIâ). These responsibilities include the design, implementation and maintenance of adequate internal financial controls that were operating effectively for ensuring the orderly and efficient conduct of its business, including adherence to company''s policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information, as required under the Act.
AUDITOR''S RESPONSIBILITY
Our responsibility is to express an opinion on the Company''s internal financial controls over financial reporting of the Company based on our audit. We conducted our audit in accordance with the Guidance Note issued by the ICAI and the Standards on Auditing prescribed under Section 143(10) of the Act, to the extent applicable to an audit of internal financial controls. 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 Company''s 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, to the best of our information and according to the explanations given to us the Company has, in all material respects, an adequate internal financial controls system over financial reporting anc such internal financial controls over financial reporting were operating effectively as at March 31, 2018, based on the criteria for internal financial control over financial reporting established by the Company considering the essential components of internal control stated in the Guidance Note issued by the ICAI.
(i) (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) According to the information and explanations given to us and the records examined by us and based on the examination of the registered sale deed provided to us, we report that, the title deeds, comprising all the immovable properties of land and buildings which are freehold and lease agreement in the case of lease of Land, are held in the name of the Company as at the balance sheet date.
(ii) The Company does not have any inventory and hence reporting under clause (ii) of the Order is not applicable.
(iii) According to the information and explanations given to us, the Company has granted unsecured loan, to a wholly owned subsidiary 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 loan, in our opinion, prima facie, not prejudicial to the Company''s interest.
(b) The repayment of principal and payment of interest have been made as stipulated.
(c) I n respect of loan granted by the Company in an earlier year to a wholly owned subsidiary company, 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 stipulation, unto the date of pre-closure of the loan.
(d) There is no overdue amount remaining outstanding as at the balance sheet date.
(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 to which directives issued by the Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevant provisions of the Companies Act, 2013 and Rules framed there under were applicable.
(vi) The maintenance of cost records has not been specified by the Central Government under section 148(1) of the Companies Act, 2013 in respect of the business / activities of the Company.
(vii) According to the information and explanations given to us, in respect of statutory dues:
(a) The Company has generally been regular in depositing undisputed statutory dues, including Provident Fund, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Goods and Services Tax, 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, Employees'' State Insurance, Income-tax, Sales Tax, Service Tax, Goods and Service Tax, Value Added Tax, cess and other material statutory dues in arrears as at March 31, 2018 for a period of more than six months from the date they became payable.
(viii) In 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 dues to debenture holders.
(c) Details of dues of Income-tax, Service Tax and Value Added Tax dues which have not been deposited as on March 31, 2018 on account of disputes are given below:
Name of Statute |
Nature of Dues |
Forum where Dispute is Pending |
Period to which the Amount Relates |
Amount (Rs, in Million) |
Income Tax Act, 1961 |
Income Tax |
Commissioner of Income Tax (Appeals) |
Assessment years 2012-13 to 2015-16 |
751.77 |
Finance Act 1994 |
Service Tax (Excluding Penalty and interest, if any) |
Customs, Excise and Service Tax Appellate Tribunal (CESTAT) |
Assessment Years 2006-07 and 2008-09 |
0.93 |
Andhra Pradesh Value Value Added Tax (Excluding Added Tax, 2005 Penalty and interest, if any) |
Deputy Commissioner (Appeals) |
Assessment Year 2011-12 |
1.68 |
|
Kerala Value Addec |
Value added Tax (Excluding |
Deputy Commissioner (Appeals), |
Financial Year 2009-10, |
49.86 |
Tax Act, 2003 |
Penalty and interest, if any) |
Thrissur |
2012-13 and 2014-15. |
(ix) The Company has not raised monies by way of initial public offer / further public offer (including debt instruments) as on the balance sheet date. The term loans raised by the Company from Banks have been applied by the Company during the year for the purposes for which they were raised, other than temporary deployment pending application of proceeds.
(x) To the best of our knowledge and according to the information and explanations given to us, no fraud by the Company anc no material fraud on the company by its officers or employees has been noticed or reported during the year other than those disclosed in Note 47 to the financial statements.
(xi) In our opinion and according to the information and explanations given to us, the Company has paid / provided manageria 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 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 177 and 188 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 the Order 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 directors of its subsidiary company or persons connected with them 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-IA of the Reserve Bank of India Act, 1934 and it has obtained the registration.
For Deloitte Haskins & Sells LLP
Chartered Accountants
(Firm''s Registration No.117366W/W-100018)
S Sundaresan
Partner
(Membership No.25776)
Bengaluru, 18th May, 2018
Mar 31, 2017
To the Members of Manappuram Finance Limited
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying standalone financial statements of Manappuram Finance Limited ("the Companyâ), which comprise the Balance Sheet as at March 31, 2017, 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 statec in Section 134(5) of the Companies Act, 2013 ("the 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 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 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 Actin 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, 2017, 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, 2016("the Orderâ) 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 purpose of our audit;
(b) In our opinion proper books of account as required by law have been kept by the Company so far as 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 Accounting Standards specified under section 133 of the Act, read with Rule 7 of 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, 2017, and taken on record by the Board of Directors, none of the directors is disqualified
as on March 31, 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 "Annexure 2â 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 standalone financial statements - Refer Note 27 to the 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 including derivative contracts - Refer Note 6 to the financial statements and ;
iii. The following are the instances of delay ir transferring amounts, to the Investor Education and Protection Fund by the Company.
Particulars |
Amount '' In Million |
Date of payment |
No of days delay |
Unpaid dividend |
0.47 |
24/10/2016 |
1 |
2008-09 |
|||
Unpaid Matured |
0.01 |
21/10/2016 |
One instance |
deposits |
of 34 days and another of 69 days respectively |
iv. The Company has provided disclosures in Note 47 in the financial statements as to the holding of Specified Bank Notes on November 8, 2016 and December 30, 2016 as well as dealings in Specified Bank Notes during the period from November 8, 2016 to December 30, 2016. Based on our audit procedures and relying on the management representation regarding the holding and nature of cash transactions, including those in Specified Bank Notes, we report that these disclosures are in accordance with the books of accounts maintained by the Company and as produced to us by the management. However, as stated in note 47 in the financial statements, certain borrowers of the Company have directly deposited cash in the Company''s bank accounts and we report that we were not made available sufficient appropriate audit evidence to report on the matter including denomination wise details of such deposits, the details of which, as represented to us, are not available with the Company. Further, as stated in note 47 in the financial statements and based on information and explanation provided to us, we report that there have been non-permitted transactions aggregating '' 47.17 million.
(i) (a) The Company has maintained proper records showing full particulars, including quantitative details and situation of fixed assets.
(b) All fixed assets have not been physically verified by the management during the year but there is a regular programme of verification which, in our opinion, is reasonable having regard to the size of the Company and the nature of its assets. No material discrepancies were noticed on such verification.
(c) According to the information and explanations given by the management, the title deeds of immovable properties included in property, fixed assets are held in the name of 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 three 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 grants and loans not prejudicial to the Company''s interest.
(b) I n respect of loans granted to companies covered in the register maintained under section 189 of the Companies Act, 2013, repayment of the principal amount is as stipulated and payment of interest has been regular.
(c) There are no amounts of loans granted to companies, firms or other parties listed in the register maintained under section 189 of the Companies Act, 2013 which are overdue and outstanding for more than ninety days.
(c) According to the records of the Company, there are no dues outstanding of wealth tax, excise duty and cess on account of any dispute. The dues outstanding of service tax, income tax and sales-tax on account of a dispute are as follows:
Name of the Statute |
Nature of dues |
Period of dispute |
Amount due '' in million * |
Forum where it is pending |
Finance Act, 1994 |
Service Tax |
FY 2001-02 to 2007- 08 |
2.99 (including penalty of 2.24) |
Commissioner of Central Excise and Service Tax (Appeals) |
Andhra Pradesh Value Added Tax Act, 2005 |
Value Added Tax |
FY-2011-12 |
5.60 (including penalty of 1.12) |
Appellate Deputy Commissioner (CT) |
Finance Act, 1994 |
Service Tax |
FY 2004-05 to 2007-08 |
3.05 |
Commissioner Central Excise and Service Tax Appellate Tribunal |
Finance Act, 1994 |
Service Tax |
FY 2008-09 |
0.37 (including penalty of 0.19) |
Commissioner Central Excise and Service Tax (Appeals) |
Income Tax Act, 1961 |
Income tax |
FY 2011-12 |
7.72 |
Commissioner of Income tax (Appeals) |
Income Tax Act, 1961 |
Income tax |
FY 2012-13 |
87.36 |
Commissioner of Income tax (Appeals) |
Income Tax Act, 1961 |
Income tax |
FY 2013-14 |
230.09 |
Commissioner of Income tax (Appeals) |
*Amount paid under protest Income tax act '' 29.90 million & Value Added Tax '' 2.80 million.(iv) In our opinion and according to the information and explanations given to us, provisions of section 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, guarantees and securities given have been complied with by the Company.
(v) The Company has not accepted any deposits from the public.
(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 products/services of the Company.
(vii) (a) Undisputed statutory dues including income-tax, excise
duty, value added tax, cess and other statutory dues have generally been regularly deposited with the appropriate authorities though there has been a slight delay in a few cases with regard to remittances of provident fund, employees'' state insurance, sales tax and service tax. The provisions relating to customs duty is 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, excise duty, value added tax, cess and other statutory dues were outstanding, at the year end, for a period of more than six months from the date they became payable.
(viii) In our opinion and according to the information and explanations given by the management, the Company has not defaulted in repayment of dues to a financial institution, bank or debenture holders. The Company did not have any outstanding dues to government during the year.
(ix) According to the information and explanations given by the management, the Company has not raised any money way of initial public offer / further public offer during the year. The Company has utilized the monies raised by way of term loan / debt instruments for the purpose for which they were raised.
(x) Based upon the audit procedures performed for the purpose of reporting the true and fair view of the standalone financial statements and according to the information and explanations given by the management, we report that no fraud by the Company has been noticed or reported during the year. However, as more fully discussed in Note 46 to the financial statements and as informed by the management, we report that, during the year there have been certain instances of fraud on the Company by officers and employees where gold loan related misappropriations / cash embezzlements / burglaries have occurred for amounts aggregating '' 17.46 million (net of recoveries of '' 54.71 million)The Company has taken or is in the processing of taking legal and other actions against such employees/third parties and making insurance claims for recoveries of these amounts from the respective insurance companies where applicable.
(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 section 177 and 188 of Companies Act, 2013 where applicable and the details have been disclosed in the notes to the standalone 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) 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.
To the Members of Manappuram Finance Limited
We have audited the internal financial controls over financial reporting of Manappuram Finance Limited ("the Companyâ) as of March 31, 2017 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 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, both 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, 2017, 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 Bharath N S
Partner
Membership Number: 210934
Place of Signature: Chennai
Date: May 25, 2017
Mar 31, 2016
We have audited the accompanying standalone financial statements of
Manappuram Finance Limited ("the Company"), which comprise the Balance
Sheet as at March 31, 2016, 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 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 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 thereunder. 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, 2016, 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, 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
purpose of our audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as 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 Accounting Standards specified under section 133 of the
Act, read with Rule 7 of the Companies (Accounts) Rules, 2014;
(e) On the basis of written representations received from the directors
as on March 31, 2016, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2016, 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 standalone financial statements - Refer Note
27 to the standalone financial statements;
ii. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses; and ;
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 PARAGRAPH 1 UNDER THE HEADING "REPORT ON
OTHER LEGAL AND REGULATORY REQUIREMENTS" OF OUR REPORT OF EVEN DATE
Re: Manappuram Finance Limited ("the Company")
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets 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, fixed assets are held in the name of 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 firms 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 grants and loans not prejudicial to
the Company''s interest.
(b) In respect of loans granted to firms covered in the register
maintained under section 189 of the Companies Act, 2013, repayment of
the principal amount is as stipulated and payment of interest has been
regular.
(c) There are no amounts of loans granted to companies, firms or other
parties listed in the register maintained under section 189 of the
Companies Act, 2013 which are overdue and outstanding for more than
ninety days.
(iv) In our opinion and according to the information and explanations
given to us, provisions of section 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, guarantees and securities given have been complied with by the
Company.
(v) The Company has not accepted any deposits from the public.
(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 products/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, excise
duty, value added tax, cess and other material statutory dues
applicable to it. The provisions relating to customs duty is 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, excise duty, value
added tax, 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, there are no dues
outstanding of wealth tax, excise duty and cess on account of any
dispute. The dues outstanding of service tax, income tax and sales-tax
on account of a dispute are as follows:
Name of the Nature of Period of Amount due
Statute dues dispute
Finance Act, Service Tax FY 2001-02 to 2.99 (including
1994 2007- 08 penalty of 2.24)
AP Value VAT FY-2011-12 5.60 (including
Added Tax penalty of 1.12)
Act, 2005
Finance Act, Service Tax FY 2004-05 to 3.05
1994 2007-08
Finance Act, Service Tax FY 2008-09 0.37 (including
1994 penalty of 0.19)
Income Tax Income tax FY 2011-12 7.72
Act, 1961
Income Tax Income tax FY 2012-13 87.36
Act, 1961
Name of the Statute Amount paid Forum where
under protest it is pending
Rs. in mil
Finance Act,1994 - Commissioner Central Excise
and Service Tax (Appeals)
AP Value Added Tax
Act, 2005 2.80 Appellate Deputy Commissioner
(CT)
Finance Act,1994 - Commissioner Central Excise
and Service Tax Appellate
Tribunal
Finance Act,1994 - Commissioner Central Excise
and Service Tax (Appeals)
Income Tax Act,1961 - Commissioner of Income tax
(Appeals)
Income Tax Act, 1961 - Commissioner of Income tax
(Appeals)
(viii) In our opinion and according to the information and explanations
given by the management, the Company has not defaulted in repayment of
dues to a financial institution, bank or debenture holders. The Company
did not have any outstanding dues to government during the year.
(ix) According to the information and explanations given by the
management, the Company has not raised any money way of initial public
offer / further public offer / debt instruments. The Company has
utilised the monies raised by way of team loan for the purpose for
which they were raised.
(x) Based upon the audit procedures performed for the purpose of
reporting the true and fair view of the standalone financial statements
and according to the information and explanations given by the
management, we report that no fraud by the Company has been noticed or
reported during the year. However, as more fully discussed in Note 47
to the standalone financial statements and as informed by the
management, we report that, during the year there have been certain
instances of fraud on the Company by employees, where gold loan related
misappropriations / cash embezzlements have occurred for amounts
aggregating Rs.60.05 million and out of which the Company has recovered
Rs. 23.69 million. The Company is in the process of recovering balance
amounts from the employees/insurance companies and taking legal
actions, where applicable. The Company has created provision
aggregating Rs.36.36 million in respect of these matters.
(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 section 177 and 188 of Companies Act, 2013 where applicable and
the details have been disclosed in the notes to the standalone
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) 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.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W/E300004
per Bharath N S
Place of Signature: Chennai Partner
Date: May 12, 2016 Membership Number: 210934
Mar 31, 2014
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Manappuram
Finance Limited (Âthe Company"), which comprise the Balance Sheet as at
March 31, 2014, and the Statement of Profit and Loss and Cash Flow
Statement for the year then ended, and a summary of signifcant
accounting policies and other explanatory information.
MANAGEMENT''S RESPONSIBILITY FOR THE FINANCIAL STATEMENTS
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 fows of the Company in accordance with
accounting principles generally accepted in India, including the
Accounting Standards notifed under the Companies Act, 1956, read with
General Circular 8/2014 dated 4 April, 2014 issued by the Ministry of
Corporate Affairs. 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.
AUDITOR''S RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical 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 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 entity''s
internal control. An audit also includes evaluating the appropriateness
of accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the over all
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
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Companies Act, 1956(Âthe 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 March 31, 2014;
(b) in the case of the Statement of Profit and Loss, of the Profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003(Âthe
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs4 and 5 of the Order.
2. 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 purpose of our
audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as 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 Balance Sheet, the Statement of Profit and Loss
and the Cash Flow Statement comply with the Accounting Standards
notified under the Companies Act, 1956, read with General Circular
8/2014 dated 4 April, 2014 issued by the Ministry of Corporate
Affairs; and
(e) On the basis of written representations received from the directors
as on March 31, 2014, and taken on record by the Board of Directors,
none of the directors is disqualified as on March 31, 2014, from being
appointed as a director in terms of clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE REFERRED TO IN OUR REPORT OF EVEN DATE
Re: Manappuram Finance Limited (''the Company'')
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verified by the management
during the year but there is a regular programme of verification which,
in our opinion, is reasonable having regard to the size of the Company
and the nature of its assets. No material discrepancies were noticed on
such verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) The Company is a non banking finance company engaged in the
business of providing loans and does not maintain any inventory.
Therefore, the provisions of clause 4(ii) of the Order are not
applicable to the Company.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. Accordingly, the
provisions of clause 4(iii)(a) to (d) of the Order are not applicable
to the Company and hence not commented upon.
(b) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured, from companies, frms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(e) to (g) of the Order are not applicable to the Company and
hence not commented upon.
(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 sale of services. The activities of the
Company during the year did not involve any purchase and sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) Based on information and explanations provided to us, we report
that the Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act, 1956 for
the Company.
(ix) (a) Undisputed statutory dues including provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth tax, sales-tax, value added tax, excise duty, professional tax,
cess and other material statutory dues have generally been regularly
deposited with the appropriate authorities though there has been a
significant delay in remittances of professional tax relating to few
branches. The provisions relating to customs duty is not applicable to
the Company.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, investor
education and protection fund, employees'' state insurance, income-tax,
wealth- tax, service tax, sales-tax, excise duty, 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. According to
the information and explanations given to us, undisputed dues in
respect of professional tax which were outstanding, at the year end,
for a period of more than six months from the date they became payable,
are as follows.
Name of the
Statute Nature of
dues Period to
which Amount Amount Due date Date of
the amount Due
Rs. In Paid
Rs.
In payment
relates mil mil
Maharashtra
Tax Professio-
nal tax FY 2004-05
to 5.05 5.05 Various
dates Various
dates
on
Professions FY 2012-13
Traders,
Callings
and
Employments
Act, 1975
(c) According to the records of the Company, there are no dues
outstanding of income tax, wealth tax, excise duty and cess on account
of any dispute. The dues outstanding of service tax and sales-tax on
account of a dispute are as follows:
Name of
the Nature of
dues Period of Amount Due
Rs. Amount Forum where
it
is pending
Statute dispute In mil paid
under
prot-
est
Rs.
in mil
Finance
Act, 1944 Service
Tax 2001-2008 4.48 (incl-
uding 1.48 Additional
Commissioner
of
penalty of
2.24) Servicetax
Commissioner
Kerala
Value Tax VAT 2010-11 6.97 (incl-
uding 2.07 Deputy Comm
issioner
Act, 2005 interest of
0.77) (Appeals)
Kerala
Value Tax VAT 2011-12 14.37 (incl-
uding 5.75 Deputy Comm
issioner
Act, 2005 interest of
1.28) (Appeals)
AP Value
Tax Act, VAT 2011-12 5.60 (incl
uding 2.80 Appellate
Deputy
2005 penalty of
1.12) Commissioner
(Appeals)
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to banks, financial
institutions or debenture holders.
(xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Order are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Order are not applicable to the
Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from
banks or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company has created
security or charge in respect of debentures issued.
(xx) We have verified that the end use of money raised by public issue
of non-convertible redeemable debenture is as disclosed in note 39 to
the financial statements.
(xxi) As more fully discussed in Note 37 to the financial statements and
as informed by the management, we report that, during the year there
have been certain instances of fraud on the Company by employees and
others, where gold loan related misappropriations / cash embezzlements
have occurred for amounts aggregating Rs. 127.66 million of which the
Company has recovered Rs. 64.78 million. The Company has taken insurance
cover for such losses and has fled insurance claims in this regard.
Further, the Company is in the process of recovering these amounts from
the employees and taking legal actions, where applicable. The Company
has created provision aggregating to Rs. 52.97 million towards these
losses based on its estimate.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W
per S Balasubrahmanyam
Place: Chennai Partner
Date: May 15, 2014 Membership Number: 053315
Mar 31, 2013
REPORT ON THE FINANCIAL STATEMENTS
We have audited the accompanying financial statements of Manappuram
Finance Limited ("the Company"), which comprise the Balance Sheet as
at March 31, 2013, and 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
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
accounting principles generally accepted in India, including the
Accounting Standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956 ("the Act"). This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that give
a true and fair view and are free from material misstatement, whether
due to fraud or error.
AUDITOR''S RESPONSIBILITY
Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical 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 control relevant to the Company''s preparation and
fair presentation of the financial statements in order to design audit
procedures that are appropriate in the circumstances. An audit also
includes evaluating the appropriateness of accounting policies used and
the reasonableness of the accounting estimates made by 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
In our opinion and to the best of our information and according to the
explanations given to us, the financial statements give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
(a) in the case of the Balance Sheet, of the state of affairs of the
Company as at March 31, 2013;
(b) in the case of the Statement of Profit and Loss, of the profit for
the year ended on that date; and
(c) in the case of the Cash Flow Statement, of the cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor''s Report) Order, 2003 ("the
Order") issued by the Central Government of India in terms of
sub-section (4A) of section 227 of the Act, we give in the Annexure a
statement on the matters specified in paragraphs 4 and 5 of the Order.
2. 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 purpose of our
audit;
(b) In our opinion proper books of account as required by law have been
kept by the Company so far as 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 Balance Sheet, Statement of Profit and Loss,
and Cash Flow Statement comply with the Accounting Standards referred
to in subsection (3C) of section 211 of the Companies Act, 1956;
(e) On the basis of written representations received from the directors
as on March 31, 2013, and taken on record by the Board of directors,
none of the directors is disqualified as on March 31, 2013, from being
appointed as a director in terms of Clause (g) of sub-section (1) of
section 274 of the Companies Act, 1956.
ANNEXURE REFERRED TO IN PARAGRAPH 3 OF OUR REPORT OF EVEN DATE
Re: Manappuram Finance Limited (''the Company'')
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) The Company is a non banking finance company engaged in the
business of providing loans and does not maintain any inventory.
Therefore, the provisions of clause 4(ii) of the Companies (Auditor''s
Report) Order, 2003 (as amended) are not applicable to the Company.
(iii) (a) According to the information and explanations given to us,
the Company has not granted any loans, secured or unsecured to
companies, firms or other parties covered in the register maintained
under section 301 of the Companies Act, 1956. Accordingly, the
provisions of clause 4(iii)(a) to (d) of the Order are not applicable
to the Company and hence not commented upon.
(b) According to information and explanations given to us, the Company
has not taken any loans, secured or unsecured, from companies, firms or
other parties covered in the register maintained under section 301 of
the Companies Act, 1956. Accordingly, the provisions of clause
4(iii)(e) to (g) of the Order are not applicable to the Company and
hence not commented upon.
(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 sale of services. The activities of the
Company during the year did not involve any purchase and sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so
entered.
(b) In our opinion and according to the information and explanations
given to us, the transactions made in pursuance of such contracts or
arrangements and exceeding the value of Rupees five lakhs have been
entered into during the financial year at prices which are reasonable
having regard to the prevailing market prices at the relevant time.
(vi) Based on information and explanations provided to us, we report
that the Company has not accepted any deposits from the public.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size of the Company and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act, 1956 for
the products of the Company.
(ix) (a) Undisputed statutory dues including provident fund, investor
education and protection fund, income-tax, wealth tax, sales-tax,
customs duty, excise duty, cess and other material statutory dues have
generally been regularly deposited with the appropriate authorities
though there has been a sight delay in a few cases of provident fund
professional tax, service tax, value added tax, wealth tax, employees
state insurance and income- tax deducted at source.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees''
state insurance, customs duty, investor education and protection fund,
income-tax, service tax, sales-tax, excise duty, cess and other
material undisputed 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, there are no dues
outstanding of income tax on account of any dispute. The dues
outstanding of service tax and sales-tax on account of a dispute are as
follows:
(Amounts in million)
Name of the Nature of Period of
Statute dues dispute
Finance Act, 1944 Service Tax 2001-2008
Kerala Value Tax Act, VAT 2010-11
2005
Kerala Value Tax Act, VAT 2011-12
2005
AP Value Tax Act, VAT 2011-12
2005
Name of the Statute Amount Forum where it is
pending
Finance Act 1944 4.48 (including
penalty of 2.24)* Additional Commissioner
of Service tax
Commissionerate
Keralal Value Tax
Act 2005 6.97 (including
interest of 0.77)** Deputy Commissioner
(Appeals)
Kerala Value Tax
Act 2005 14.37 (including
interest of 1.28)*** Deputy Commissioner
(Appeals)
AP Value Tax Act 2005 5.60 (including
penalty of 1.12)**** Appellate Deputy
Commissioner (Appeals)
* The Company has paid Rs. 1.48 towards service tax liability.
** The Company has paid Rs. 2.07 towards VAT tax liability.
*** The Company has paid Rs. 5.75 towards VAT tax liability including
interest.
**** The Company has paid Rs. 2.24 towards VAT tax liability and Rs.
0.56 towards penalty.
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to banks, financial
institutions or debenture holders.
(xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/mutual
benefit fund/society. Therefore, the provisions of clause 4(xiii) of
the Companies (Auditor''s Report) Order, 2003 (as amended) are not
applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor''s Report) Order,
2003 (as amended) are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company has created
security or charge in respect of debentures issued other than on
debentures aggregating Rs. 2,495 million which had been issued
recently. Subsequent to year end, the Company has created security or
charge in respect of these debentures.
(xx) The Company has not raised any money through public issues during
the year and accordingly Clause (xx) of the Companies (Auditors Report)
Order 2003 as amended is not applicable for the current year.
(xxi) As more fully discussed in Note 39 to the financial statements
and as informed by the management we report that, during the year there
have been certain instances of fraud on the Company by employees and
others where gold loan related misappropriations/cash embezzlements
have occurred for amounts aggregating an amount of Rs. 56.34 (net of
recoveries of Rs. 14.61 million). The Company has fully provided for
these amounts in the financial statements and is in the process of
recovering these amounts from the employees and taking legal actions.
For S.R. Batliboi & Associates LLP
Chartered Accountants
ICAI Firm Registration Number: 101049W
per S. Balasubrahmanyam
Place: Chennai Partner
Date: May 15, 2013 Membership Number: 053315
Mar 31, 2012
1. We have audited the attached Balance Sheet of Manappuram Finance
Limited ('the Company') as at March 31, 2012 and also the Statement of
profit and loss and the cash flow statement for the year ended on that
date annexed thereto. These financial statements are the
responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of materia misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financia 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 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
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;
i. In our opinion, proper books of account as required by aw have been
kept by the Company so far as appears from our examination of those
books;
iii. 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;
v. In our opinion, the balance sheet, statement of profit and oss and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub- section (3C) of section 211 of
the Companies Act, 1956;
v. On the basis of the written representations received from the
directors, as on March 31, 2012, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2012 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of the
Company as at March 31, 2012;
b) in the case of the statement of profit and loss, of the profit for
the year ended on that date; and
c) in the case of cash flow statement, of the cash flows for the year
ended on that date.
Annexure referred to in paragraph 3 of our report of even date Re:
Manappuram Finance Limited ('the Company')
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) The Company is a non banking finance company engaged in the
business of providing loans and does not maintain any inventory.
Therefore, the provisions of clause 4(ii) of the Companies (Auditor's
Report) Order, 2003 (as amended) are not applicable to the Company.
(iii) (a) As informed, the Company has not granted any loans, secured
or unsecured to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956 ('the
Act'). Therefore, the provisions of clause 4(iii) (a) of the Companies
(Auditor's Report) Order, 2003 (as amended) is not applicable to the
Company.
(b) The provisions of clause 4(iii) (b) of the Companies (Auditor's
Report) Order, 2003 (as amended) is not applicable to the Company.
(c) The provisions of clause 4(iii) (c) of the Companies (Auditor's
Report) Order, 2003 (as amended) is not applicable to the Company.
(d) The provisions of clause 4(iii) (d) of the Companies (Auditor's
Report) Order, 2003 (as amended) is not applicable to the Company.
(e) The Company had taken loan from a Company covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs. 1.64 million and the year-end
balance of loan taken from such party was Rs. Nil.
(f) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(g) In respect of loans taken, repayment of the principal amount was as
stipulated and payment of interest was regular.
(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 sale of services. The activities of the
Company during the year did not involve any purchase and sale of goods.
During the course of our audit, we have not observed any major weakness
or continuing failure to correct any major weakness in the internal
control system of the Company in respect of these areas.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so
entered.
(b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs entered into during
the financial year, because of the unique and specialized nature of the
items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices
at the relevant time.
(vi) Based on information and explanations provided to us, we report
that the Company has not accepted any deposits from the public.
(vii) The Company has an internal audit system commensurate with the
size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act, 1956 for
the products of the Company.
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
employees' state insurance, customs duty, investor education and
protection fund, income-tax, sales-tax, service tax, cess and other
material statutory dues applicable to it. Dues in respect of wealth-tax
and excise duty 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, customs duty, investor education and protection fund,
income- tax, service tax, sales-tax and other material undisputed
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, there are no dues
outstanding of income tax and sales-tax on account of any dispute. The
dues outstanding of service tax on account of a dispute are as follows:
(Amount is millions)
Name of the
Statute Nature of dues Period of
dispute Amount Forum where
it is pending
Finance
Act, 1944 Service tax 2001-2008 5.00
(including
penalty
Commissioner of
Service tax
of 2.5) (Appeals)
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to banks, financia
nstitutions or debenture holders.
(xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor's Report) Order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) Order,
2003 (as amended) are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) Based on the information and explanations given to us by the
management, term loans were applied for the purpose for which the loans
were obtained.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short- term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
to parties or companies covered in the register maintained under
section 301 of the Companies Act, 1956.
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company has created
security or charge in respect of debentures issued other than on
debentures aggregating Rs 870 million which had been issued recently.
Subsequent to year end, the Company has created security or charge in
respect of these debentures.
(xx) We have verified that the end use of money raised by public issue
of non-convertible redeemable debentures is as disclosed in the notes
to the financial statements.
(xxi) As more fully discussed in Note 38 to the financia statements and
as informed by the management, we report that, during the year there
have been certain nstances of fraud on the Company by employees where
gold loan related misappropriations / cash embezzlements have occurred
for amounts aggregating Rs. 38.32 million. The Company has fully provided
for these amounts in the financial statements and is in the process of
recovering these amounts from the employees and taking legal actions.
For S.R. BATLIBOI & ASSOCIATES
Chartered Accountants
Firm registration number: 101049W
per S. Balasubrahmanyam
Place: Kochi Partner
Date: May 18, 2012 Membership No.: 053315
Mar 31, 2011
1. We have audited the attached Balance Sheet of Manappuram General
finance and Leasing Limited (Ãthe Company') as at March 31, 2011 and
also the Profit and Loss account and the cash flow statement for the
year ended on that date annexed thereto. These financial statements are
the responsibility of the Company's management. our responsibility is
to express an opinion on these financial statements based on our audit.
2. We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by 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 (as
amended) issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956, we enclose
in the Annexure a statement on the matters specified in paragraphs 4
and 5 of the said order.
4. further to our comments in the Annexure referred to above, we
report that:
i. We have obtained all the information and explanations, which to the
best of our knowledge and belief were necessary for the purposes of our
audit;
ii. In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books;
iii. The balance sheet, profit and loss account and cash flow
statement dealt with by this report are in agreement with the books of
account;
iv. In our opinion, the balance sheet, profit and loss account and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956;
v. on the basis of the written representations received from the
directors, as on March 31, 2011, and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2011 from being appointed as a director in terms of clause
(g) of sub-section (1) of section 274 of the Companies Act, 1956;
vi. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view in conformity with the accounting principles
generally accepted in India;
a) in the case of the balance sheet, of the state of affairs of the
Company as at March 31, 2011;
b) in the case of the profit and loss account, of the profit for the
year ended on that date; and
c) in the case of cash flow statement, of the cash flows for the year
ended on that date.
Annexure referred to in paragraph 3 of our report of even date
Re: Manappuram General finance and Leasing Limited (Ãthe Company')
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) All fixed assets have not been physically verified by the
management during the year but there is a regular programme of
verification which, in our opinion, is reasonable having regard to the
size of the Company and the nature of its assets. No material
discrepancies were noticed on such verification.
(c) There was no disposal of a substantial part of fixed assets during
the year.
(ii) The Company is a non banking finance company engaged in the
business of providing loans and does not maintain any inventory.
Therefore, the provisions of clause 4(ii) of the Companies (Auditor's
Report) order, 2003 (as amended) are not applicable to the Company.
(iii) (a) As informed, the Company has not granted any loans, secured
or unsecured to companies, firms or other parties covered in the
register maintained under section 301 of the Companies Act, 1956 (Ãthe
Act'). Therefore, the provisions of clause 4(iii) (a) of the Companies
(Auditor's Report) order, 2003 (as amended) is not applicable to the
Company.
(b) The provisions of clause 4(iii) (b) of the Companies (Auditor's
Report) order, 2003 (as amended) is not applicable to the Company.
(c) The provisions of clause 4(iii) (c) of the Companies (Auditor's
Report) order, 2003 (as amended) is not applicable to the Company.
(d) The provisions of clause 4(iii) (d) of the Companies (Auditor's
Report) order, 2003 (as amended) is not applicable to the Company.
(e) The Company had taken loan from a Company covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs. 3.56 million and the year-end
balance of loan taken from such party was Rs. 1.64 million
(f) In our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(g) In respect of loans taken, repayment of the principal amount was as
stipulated and payment of interest was regular.
(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 sale of services. The activities of the
Company during the year did not involve any purchase and sale of goods.
During the course of our audit, no major weakness has been noticed in
the internal control system in respect of these areas. During the
course of our audit, we have not observed any continuing failure to
correct major weakness in internal control system of the Company.
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so
entered.
(b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding value of Rupees five lakhs entered into during
the financial year, because of the unique and specialised nature of the
items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices
at the relevant time.
(vi) In respect of deposits accepted, in our opinion and according to
the information and explanations given to us, directives issued by the
Reserve Bank of India and the provisions of sections 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 and the rules
framed thereunder, to the extent applicable, have been complied with.
We are informed by the management that no order has been passed by the
Company Law Board, National Company Law Tribunal or Reserve Bank of
India or any Court or any other Tribunal.
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act, 1956 for
the products of the Company.
(ix) (a) The Company is regular in depositing with appropriate
authorities undisputed statutory dues including provident fund,
employees' state insurance, investor education and protection fund,
income-tax, sales-tax, service tax, cess and other material statutory
dues applicable to it. Dues in respect of wealth-tax, customs duty and
excise duty are not applicable to the Company.
further, since the Central Government has till date not prescribed the
amount of cess payable under section 441 A of the Companies Act, 1956,
we are not in a position to comment upon the regularity or otherwise of
the Company in depositing the same.
(b) According to the information and explanations given to us, no
undisputed amounts payable in respect of provident fund, employees'
state insurance, investor education and protection fund, income-tax,
service tax, sales-tax and other material undisputed 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, there are no dues
outstanding of sales-tax on account of any dispute. The dues
outstanding of income tax and service tax on account of a dispute are
as follows:
(Amount in million)
Name of the
Statute Nature of dues Period of
dispute Amount Forum where it is
pending
Income Tax
Act 1961 Income tax 2005-2006 0.35 Income tax appellate
tribunal
finance
Act, 1944 Service tax 2001-2008 5.00
(including
penalty of
2.5) Commissioner of
Service tax
(Appeals)
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi) Based on our audit procedures and as per the information and
explanations given by the management, we are of the opinion that the
Company has not defaulted in repayment of dues to banks, financial
institutions or debenture holders.
(xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintained adequate records where the
Company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi /
mutual benefit fund / society. Therefore, the provisions of clause
4(xiii) of the Companies (Auditor's Report) order, 2003 (as amended)
are not applicable to the Company.
(xiv) In our opinion, the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies (Auditor's Report) order,
2003 (as amended) are not applicable to the Company.
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions.
(xvi) The Company did not have any term loans outstanding during the
year.
(xvii) According to the information and explanations given to us and on
an overall examination of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has made preferential allotment of shares to
parties and companies covered in the register maintained under section
301 of the Act. In our opinion, the prices at which the shares have
been allotted are not prejudicial to the interest of the Company.
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company has created
security or charge in respect of debentures issued other than on
debentures aggregating Rs. 1,188 million which had been issued recently.
We are informed by the management that the Company is taking steps to
create security for the debentures issued.
(xx) The Company has not raised any money by public issues and
accordingly, provisions of clause 4(xx) of the Companies (Auditor's
Report) order, 2003 (as amended) are not applicable to the Company. The
Company has made private placement of its equity shares to certain
Qualified Institutional Buyers ("QIB") which in our opinion and based
on information and explanations given by management does not constitute
a public issue.
(xxi) As more fully discussed in Note 17 of Schedule 18 to the
financial statements and as informed by the management, we report that,
during the year there have been certain instances of fraud on the
Company by employees where gold loan related misappropriations / cash
embezzlements have occurred for amounts aggregating Rs. 24.87 million.
The Company has fully provided for these amounts in the financial
statements and is in the process of recovering these amounts from the
employees and taking appropriate legal actions.
Based upon the audit procedures performed for the purpose of reporting
the true and fair view of the financial statements and as per the
information and explanations given by the management, we report that
there are no other instance of fraud on or by the Company that have
been noticed or reported during the course of our audit, other than
those described above.
For S. R. BATLIBOI & ASSOCIATES
firm registration number: 101049W
Chartered Accountants
per S. Balasubrahmanyam
Place: Chennai Partner
Date: April 28, 2011 Membership No.: 053315
Mar 31, 2010
1 We have audited the attached Balance Sheet of Manappurarn General
Finance and Leasing Limited {the Company) as at March 31, 2010 and
also the Profit and Loss account and the cash flow statement for the
year ended on that date annexed thereto These financial statements are
the responsibility of the Companys management Our responsibil- ity is
to express an opinion on these financial statements based on our audit
2. We concucted our audit in accordance with auditing standards
generally accepted in India Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements an? free of material misstatement An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by management, as well as evaluating the overall financial statement
presentation. We believe that our audit provides a reasonable basis for
our opinion.
3. As required by the Companies (Auditors Report) Order, 2003 (as
amended) issued by the Central Government of India in terms of
sub-section (4 A) of Section 227 of the Companies Act. 1956, we
enclose in the Annexure a statement on the matters specified in
paragraphs 4 and 5 of the said Order.
4. Further to our comments in the Annexure referred to above, we
report that:
I. We have obtained all the information and explanations. which to
the best of our knowledge and belief were necessary for the purposes of
our audit
ii. In our opinion, proper books of account as required by law have
been kept by the Company so far as appears from our examination of
those books.
III. The balance sheet, profit and loss account and cash flow statement
dealt with by this report are in agreement with the books of account
IV. In our opinion, the balance sheet, profit and loss account and
cash flow statement dealt with by this report comply with the
accounting standards referred to in sub-section (3C) of section 211 of
the Companies Act, 1956.
v On the basis of the written representations received from the
directors, as on March 31, 2010 and taken on record by the Board of
Directors, we report that none of the directors is disqualified as on
March 31, 2010 from being appointed as a director in terms of clause
(g} of sub-section (1) of section 274 of the Companies Act, 1956
vi. 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
generaly accepted in India.
a) In the case of the balance sheet, of the state of affairs of the
Company as at March 31, 2010.
b) In the case of the profit and loss account, of the profit for the
year ended on that date
c) in the case of cash flow statement, of the cash flows for the year
ended on that date.
Annexure referred to in paragraph 3 of our report of even date
Re: Manappuram General Finance & leasing Limited (the Company)
(i) (a) The Company has maintained proper records showing full
particulars, including quantitative details and situation of fixed
assets.
(b) Fixed assets have been physicaly verified by the management during
the year and no material discrepancies were identified on such
verification.
(c) There was no disposal of a substantial pan of fixed assets during
the year
(ii) The Company is a non banking finance company engaged in the
business of providing loans and does not maintain any inventory.
Therefore, the provisions of clause 4(ii)of the Companies (Auditors
Report) Order, 2003 (as amended)are not applicable to the Company
{iii) (a) As informed, the Company has not granted any loans, secured
or unsecured to companies, firms or other parties covered In the
register maintained under section 301 of the Companies Act. 1956 (the
Act}. Therefore. Ihe Provisions of clause 4(iii) (b). (c) and (d) of
the Companies (Auditors Report) Order. 2003 (as amended) are not
applicable to the Company
(b) The Company had taken loan from a company covered in the register
maintained under section 301 of the Companies Act, 1956. The maximum
amount involved during the year was Rs. 3.56 million and the year-end
balance of loan taken from such party was Nil
(C) in Our opinion and according to the information and explanations
given to us, the rate of interest and other terms and conditions for
such loans are not prima facie prejudicial to the interest of the
Company.
(d) in respect of loans Taken, repayment of the principal amount was as
stipulated and payment of interest was regular.
{iv) In our opinion and accordrig 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 busness, .for the
purchase of fixed assets. The activities of the Company during the year
did not involve any purchase of goods or sale of goods or services.
During the course of our audit, no major weakness has been noticed in
the internal control system in respect of these areas,
(v) (a) According to the information and explanations provided by the
management, we are of the opinion that the particulars of contracts or
arrangements referred to in section 301 of the Act that need to be
entered into the register maintained under section 301 have been so
entered
(b) In respect of transactions made in pursuance of such contracts or
arrangements exceeding value of Rs 5 lakhs entered into during the
financial year, because of the unque and specialized nature of the
items involved and absence of any comparable prices, we are unable to
comment whether the transactions were made at prevailing market prices
at the relevant time
(vi) In respect of deposits accepted, in our option and according to
the information and explanations given to us, directives Issued by the
Reserve Bank of India and the provisions of sections 58A, 58AA or any
other relevant provisions of the Companies Act, 1956 and the rules
framed thereundet, to the extent applicable, have been complied with.
We are informed by the management that no order has been passed by the
Company Law Board National Company Law Tribunal or Reserve Bank of
India or any Court or any other Tribunal
(vii) In our opinion, the Company has an internal audit system
commensurate with the size and nature of its business.
(viii) To the best of our knowledge and as explained, the Central
Government has not prescribed maintenance of cost records under clause
(d) of sub-section (1) of section 209 of the Companies Act* 1956 for
the products of the Company.
(ix) (a) The Company is regular depositing with appropriate authorities
undisputed statutory dues including Provident fund. employees state
insurance, investor education and protection fund, income-tax,
sales-tax. service lax, cess and other material statutory dues
applicable to it. Dues in respect of wealth-tax. customs duty and
excise duty are not applicable to the Company.
Further. Since the Central Government has till date not prescribed the
amount of cess payable under section 441 A of the Companies Act,1956,
we are not in a position to comment upon the regularity or otherwise of
the company in deposling the same.
(b) According to the information and explanations given to us, no
undisputed amounts payable In respect of provident fund, employees
state Insurance income tax, service tax, sales tax and other undisputed
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, there are no dues
outstanding of income-tax, sales-tax, wealth-tax, service tax, customs
duty, excise duty and cess on account of any dispute.
(x) The Company has no accumulated losses at the end of the financial
year and it has not incurred cash losses in the current and immediately
preceding financial year.
(xi] Based on our audit procedures and as per the information and
explanations given by the management* we are of the opinion than the
Company has not defaulted in repayment of dues to a bank or debenture
holders There are no dues to financial institutions.
(xii) Based on our examination of documents and records, we are of the
opinion that the Company has maintaned adequate records where the
Company has granted loans and advances on the basis of security by way
of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund or a nidhi/
mutual benefit fund/ society Therefore, the provisions of clause
4(xiii) of the Companies (Auditors Report) Order 2003 (as amended] are
not applicable to the Company.
(xiv) In our opinion the Company is not dealing in or trading in
shares, securities, debentures and other investments. Accordingly, the
provisions of clause 4(xiv) of the Companies {Auditors Report) Order,
2003 (as amended) are not applicable to the Company;
(xv) According to the information and explanations given to us, the
Company has not given any guarantee for loans taken by others from bank
or financial institutions,
(xvi) The Company did not have any term loans outstading during the
year.
(xvii) According to the Information and explanations given to us and on
an overall examnation of the balance sheet of the Company, we report
that no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has all otted shares against warrants to a party
covered in the register mantained under section 301 of the Companies
Act, 1956, in our opinion, the prices at which the shares have been
allotted are not prejudicial to the interest of the Company.
(xix) According to the information and explanations given to us, during
the period covered by our audit report, the Company has created
security or charge in respect of debentures issued.
(xx)The Company has not raised any money by pubic issues and
accordingiy. provisions of clause 4(xx) of the Companies (Auditors
Report) Greet 2003 (as amended) are not applicable to the Company. The
Company has made private placement of its equity shares to certain
Qualified institutional Buyers {"06") which in our opinion and based on
information and explana- tions given by management does not constitute
a public issue.
(xxi) As more fully discussed in Note 19 of Schedule 18 to the
financial statment, we report that during the year there have been
certain instances of fraud on the Company by employees where gold loan
related misappropriations have occurred for amounts aggregating Rs &47
million.
Based upon the audit procedures performed for the purpose of reporting
the true and fair view of the financial statements and as per the in
formation and explanations given by the management, we report that
there are no other instances of fraud on or by the Company that have
been noticed or reported during the course of our audit, other than
those described above
For S.R. BATLIBOI & ASSOCIATES
Firm Registration Number : 101049W
Chartered Accountants
per S Balasubrahmanyam
Partner
Membership No.. 053315
Place: Chennai
Date: May 11.2010