Mar 31, 2015
We have audited the accompanying financial statements of MANIPAL
FINANCE CORPORATION LIMITED ("the company"), which comprise the Balance
Sheet as at 31 March, 2015, the Statement of Profit and Loss, the Cash
Flow Statement for the year 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 in
Section 134(5) of the Companies Act, 2013 ("the Act") with respect to
the preparation of these financial statements that give a true and fair
view of the financial position, financial performance and cash flows of
the Company in accordance with the accounting 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 the maintenance of
adequate accounting records in accordance with the provision of the Act
for safeguarding of the assets of the Company and for preventing and
detecting the 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 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 financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
Matters which are required to be included in the audit report under the
provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing
specified under Section 143(10) of the Act. Those Standards require
that we comply with ethical requirements and plan and perform the audit
to obtain reasonable assurance about whether the financial statements
are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about
the amounts and the disclosures in the financial statements. The
procedures selected depend on the auditor's judgment, including the
assessment of the risks of material misstatement of the financial
statements, whether due to fraud or error. In making those risk
assessments, the auditor considers internal financial control relevant
to the Company's preparation of the financial statements that give a
true and fair view in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing
an opinion on whether the Company has in place an adequate internal
financial controls system over financial reporting and the operating
effectiveness of such controls. An audit also includes evaluating the
appropriateness of the accounting policies used and the reasonableness
of the accounting estimates made by the Company's Directors, as well as
evaluating the overall presentation of the financial statements.
We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our audit opinion on the financial
statements.
Basis for the qualified opinion:
1. We draw attention to Note No. 23.02 of the financial statements.
The Company has incurred losses and its majority of funds are blocked
in Non Performing Assets, raising a doubt about the Company to continue
as a going concern. The Company has presented a scheme of arrangement
for restructure of liabilities as detailed in Note No. 5.01 of the
financial statements and subsequently withdrawn the same, for reasons
given therein. The Company is exploring the possibility of presenting
the new scheme of arrangement, as detailed in the aforesaid Notes. The
account, however have been prepared on a "going concern basis" in view
of management perception as detailed in Note No. 23.02 as aforesaid.
However we are unable to comment on the ultimate realisability of
Company's assets including the Fixed Assets under lease. Accordingly we
are also unable to comment on the Company's ability to settle its
debts/liabilities (including Deposits, subordinated debts and secured
Redeemable Debentures.)
2. We draw the attention to Note 5.01 of the Financial Statements. The
Company has stopped (i) repayment of matured debentures & matured
subordinated debts and (ii) payment of interest on debentures and
subordinated debts from 1st day of July 2002 and proposed a scheme of
arrangement before the Hon'ble High Court of Karnataka, as referred to
in the aforesaid Note (which is since withdrawn and we are informed
that the Company is exploring the possibility presenting a new scheme
of arrangement). Further the Company has also stopped repayment of
deposits matured for repayment from the aforesaid date. All the debts
of the Company i.e. debentures, subordinated debts and deposits are
matured for repayment. The Company has provided for interest on
deposits/debentures/debts upto 30th June, 2002 and not thereafter.
There are also many instances of settlement of debentures, debts and
public deposits at the discounted rates with partial/full waiver of
interest, which has been done with mutual consent. We are also informed
that the remaining depositors/debenture
holders/debt holders have approached the Company for settlement of the
dues and the Company is in the process for the same.
As per the information given to us various consumer courts (including
the Appellate Authorities/Courts acting under the Consumer Protection
Act) have passed the orders, for the repayment of certain
deposits/debentures/debts with interest and other costs. The detailed
information on these orders have not been made available to us. However
we are informed that the Company has settled the dues of such customers
in many cases, which also includes settlement at discounted rates with
partial/full waiver of interest and many of the remaining such persons
have approached the Company for settlement.
We draw the attention to the Statement made by the Management of the
Company in Note No. 5.01 of the Financial Statement which is as
follows: "Considering the facts that the Company has settled the dues
of depositors/debenture holders/debt holders at the discounted rates as
stated above, that the remaining customers have approached the Company
for settlement of their dues, that the orders issued by the various
consumer courts including the appellate authorities/courts therein,
that the Company has settled the many of such consumer court cases,
that the total debts of the Company have reduced considerably because
of settlement as aforesaid and that the Company is exploring the
possibility of framing the new scheme of arrangement, it is not
feasible for the Company to ascertain accurately its liability on any
given date".
Considering all the facts as given above, we qualify our opinion that
it is not feasible for us to ascertain accurately the liability of the
Company as on the date of the Balance Sheet.
Qualified Opinion:
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in the Basis of Qualified Opinion paragraph, 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 31,2015;
(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.
Emphasis of Matter:
We draw the attention to Note 2.01 of the Financial Statements. The
Company during the year with a view towards restructuring its
liabilities has settled deposits/debentures/ subordinated debts at
discounted rates. The same has been done with due consent of the
parties to deposits, debentures and debts. The interest write back
arising out of such settlement is considered as Extraordinary Income in
the Statement of Profit and Loss. Principal write back arising out of
such settlement is considered as capital receipt and taken directly to
Capital Reserve (viz: Capital Reserve 2) in the Balance Sheet. This has
been done as per the accounting policy followed by the Company, as
stated in Note No. 23.01 (J). The Company had made similar settlements
during the earlier years also, by giving the similar accounting
treatment. Our opinion is not qualified on this matter.
Report on other Legal and Regulatory Requirements:
1. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order"'), issued by the Central Government of India in terms of
sub-section (11) of Section 143 of the Companies Act, 2013, we give in
the Annexure a statement on the matters specified in paragraphs 3 and 4
of the Order, to the extent applicable.
2. In terms of press release issued by Reserve Bank of India dated
27.06.2001, we state that:
a) The Certificate of Registration as issued by the Reserve Bank of
India is not in force, since same was cancelled during December 2004.
b) The Company has not obtained credit rating.
c) The capital adequacy ratio is negative and accordingly the Company's
Loans, advances and investments are above the credit exposure limits.
d) The Company has not filed the prudential returns and annual returns
as per revised directives. However the Company has filed such returns
as per the directives as prevailed till 31st March, 2011 i.e.
prudential returns on half yearly basis and annual return once a year.
e) The public deposits are matured for repayment, but remained unpaid
by the Company. However the company has settled some of the deposits at
discounted rates without interest. The Company has not provided/paid
interest on deposits after 30th June, 2002.
f) The Company has not created floating charge in favour of the
depositors, on the statutory liquid assets invested.
g) The Company has not closed any of its branches during the year.
Therefore the question of making any comments therein does not arise.
3. As required by Section 143(3) of the Act, we report:
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 appears from our examination of those
books.
c. the Balance Sheet, the 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 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. Our Qualifications as given under paragraph titled "Basis for
qualified opinion" may have adverse effect on the functioning of the
Company, if the management perception as detailed in para 23.02 does
not materialize. However our observation as given under paragraph
titled "Emphasis of matter" will not have adverse effect on the
functioning of the Company.
f. We are of the opinion that the Directors of the Company are
disqualified from being appointed as Directors of other public
companies under 164(2) of the Companies Act, 2013, for the reason that
the Company has not fully discharged its liability towards matured
deposits/debentures/subordinated debts. One of the Directors of the
Company Sri Chandappa R. Sherigar is also the Director of another
Company, which has not fully discharged its liability towards matured
deposits/ debentures. Therefore we are also of the opinion that the
disqualification under Section 164(2) of the Act is applicable to him,
from becoming the Director of other Public Companies. However the
management of the Company are of the opinion that its directors are not
disqualified u/s 164(2) of the Companies Act, 2013 for the reasons as
stated in note 23.06 of the financial statement.
g. With respect to the other matters 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:
1) The Company has stated vide 23.05 and 23.13 of the financial
statement that the impact of pending litigations on its financial
position is not ascertainable for the reasons as stated in the
aforesaid notes.
2) The Company did not have any long-term contracts including
derivatives contracts for which there were any material foreseeable
losses, which has been confirmed by the management vide note 23.14 of
the financial statement.
3) The Company has not transferred any amount to the credit of Investor
Education and Protection Fund during the year under audit, for the
reason as given in note 5.01 and 23.15 of financial statement.
Accordingly commenting on delay in transferring the amounts to the
aforesaid fund does not arise.
ANNEXURE TO INDEPENDENT AUDITOR'S REPORT (issued to the Members of
MANIPAL FINANCE CORPORATION LIMITED) REFERRED TO IN PARAGRAPH 1 UNDER
THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF EVEN
DATE
As required by the Companies (Auditor's Report) Order 2015 (hereinafter
referred to as "the order"), issued by the Central Government under
Section 143(11) of the Companies Act, 2013, and on the basis of such
checks as we considered appropriate, and according to the information
and explanations given to us, we further report that:
1. a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) According to the information and explanations given to us the fixed
assets other than those under lease, have been physically verified by
the management during the period and no material discrepancies were
noticed on such verification as compared to available records. In
respect of leased assets physical verification has not been done during
the year. We are informed that the Company is in the process of
verifying those assets.
2. a) According to the information and explanation given to us,
inventory which consist of the shares and securities, have been
physically verified by the management at regular intervals.
b) In our opinion the procedure of physical verification adopted by the
management is reasonable and adequate in relation to the size of the
company and the nature of its business.
c) On the basis of our examination of the records of stock of shares
and securities, we are of the opinion that the company is maintaining
proper records of stock. During the year no material discrepancies have
been noticed on physical verification of stock.
3. As per the information and explanation given to us, the company
during the year has not granted loans, secured or unsecured to/from
companies, firms or other parties covered in the register maintained
under Section 189 of the Act. Hence further commenting on Clause (iii)
of para 3 of the said order does not arise.
4. In our opinion, According to the information and explanation given
to us, the company has an adequate internal control procedure in
commensurate with its size and nature of business, for the purchase of
inventory and fixed assets and for the sale of assets/services. There
is no major continuing failure to correct major weakness in internal
control system.
5. In our opinion and according to the information and explanation
given to us the Company has complied with the directives issued by the
Reserve Bank of India, the provision of Section 73 to 76 of the
Companies Act, 2013, Companies (Acceptance of Deposit) Rules 2014 and
Non Banking Financial Companies (Reserve Bank Directions) with regard
to acceptance of deposit from public subject to the exception of
renewal of deposits up to 18.01.2000 with maturity dates falling beyond
31stDecember, 2003, non payment of principal/ interest as and when it
became due. Our other observations are being made in main audit report
under the head "Basis for qualified opinion". However no fresh deposits
accepted/renewed during the year under audit. We are informed by the
management that the company has not received any order by Company Law
Board or National Company Law Tribunal or Reserve Bank of India or any
Court or any other Tribunal in respect of deposits, except the orders
from various Consumer Courts (including the Appellate
Authorities/Courts acting upon under Consumer Protection Act) regarding
repayment of proceeds of debentures/debts/deposits with interest and
other costs. The detailed information on these are not made available
to us. Therefore we are not in a position to comment on the compliance
of aforesaid orders. However we are informed that the Company has
settled the dues of many of such cases, which also includes settlement
at discounted rates. The Company has also received the order from
Reserve Bank of India during December 2004, canceling the certificate
of registration.
6. The Central Government has not prescribed maintenance of cost
records under Clause (d) of Sub-section (1) of Section 148 of the
Companies Act, 2013. Therefore the question of making further comments
therein does not arise.
7. a) According to the information and explanation given to us, the
company is regular in depositing undisputed statutory dues as detailed
in Para 4(ix) (a) of the Order (i.e. provident fund, employees' state
insurance, income tax, sales tax, wealth tax, service tax, customs duty,
excise duty, cess, value added tax and other statutory dues) with the
appropriate authorities, and there are no arrears of outstanding
statutory dues as at the last day of the financial year concerned for a
period of more than six months from the date they became payable.
b) According to the records of the company there are no dues of Sales
Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty,
Cess, value added tax which have not been deposited due to any dispute.
c) The Company has disclosed the matured debentures/subordinated debts
as current liabilities, which are not due to be transferred to Investor
Education and Protection Fund, for the reasons given in Note. 5.01 of
the Accounts. We are informed by 'he management that, there are no
unclaimed matured deposits/deben'ures/deb's and interest thereon and
therefore the same are not required to be remitted to the credit of
Investor Education and Protection Fund. Accordingly we are not
expressing our opinion on the contribution to the aforesaid fund.
8. The accumulated losses at the end of the financial year are not
less than fifty per cent of its net worth. The company has not incurred
cash losses during the current year and also during the immediately
preceding financial year.
9. Based on our audit and according to the information and the
explanations given to us, we are of the opinion that the company has
during the year defaulted in payment of dues to the debenture holders
amounting Rs. 67136 thousands (P. Y Rs. 68043 thousands). Interest on
debentures not paid/provided since 1st day of July 2002. However a
scheme of arrangement was submitted before the Hon'ble High Court of
Karnataka to repay the debenture with interest thereon in the manner
mentioned in the Note No. 5.01 to the financial statements. But the
scheme is since withdrawn and the Company is exploring the possibility
of presenting a new scheme of arrangement, as detailed in Note No. 5.01
as aforesaid.
10. According to the information and explanation given to us the
company has not given any guarantee for loans taken by others from bank
or financial institution, hence further commenting on this aspect does
not arise.
11. The company has not obtained any term loans from banks or
financial institutions during the year. Therefore the question of
making comments as required under Para 3(xi) does not arise.
12. Based on our audit, which we have conducted in accordance with the
Generally Accepted Auditing Practices in India and according to the
information and explanation given to us no fraud on or by the company
has been noticed or reported during the year.
For PAI NAYAK & ASSOCIATES
Chartered Accountants
Firm's Registration Number: 009090S
sd/-
CA ANANTHANARAYANA PAI K.
Place of Signature: MANIPAL Partner
Date : 29th May, 2015 Membership Number: 024541
Mar 31, 2014
We have audited the accompanying financial statements of Manipal
Finance Corporation Limited ("the 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
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
the Accounting Standards referred to in Sub-section (3G) of Section 211
of the Companies Act, 1956 ("the Act") read with the General Circular
15/2013 dated 13th September, 2013 of the Ministry of Corporate Affairs
in respect of Section 133 of the Companies Act, 2013. This
responsibility inpludes 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 Companies
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 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.
Basis for the qualified opinion:
1. We draw attention to Note No. 24.02 of the financial statements. The
Company has incurred losses and its majority of funds are blocked in
Non Performing Assets, raising a doubt about the Company to continue as
a going concern. The Company has presented a scheme of arrangement for
restructure of liabilities as detailed in Note No. 5.01 of the
financial statements and subsequently withdrawn the same, for
reasons given therein. The Company is exploring the possibility of
presenting the new scheme of arrangement, as detailed in the afore
said Notes. The account, however have been prepared on a "going
concern basis" in view of management perception as detailed in Note
No. 24.02 as aforesaid. However we are unable to comment on the
ultimate reliability of Company''s assets including the Fixed Assets
under lease. Accordingly we are also unable to comment on the
Company''s ability to settle its debts/liabilities (including
Deposits, Subordinated debts and Secured Redeemable Debentures.)
2. We draw the attention to Note 5.01 of the Financial Statements. The
Company has stopped (i) repayment of matured debentures & matured
subordinated debts and (ii) payment of interest on debentures and
subordinated debts from 1st day of July, 2002 and proposed a scheme of
arrangement before the Hon''ble High Court of Karnataka, as referred
to in the aforesaid Note (which is since withdrawn and we are informed
that the Company is exploring the possibility presenting anew scheme
of arrangement). Further the Company has also stopped repayment of
deposits matured for repayment from the aforesaid date. All the debts
of the Company i.e. debentures, subordinated debts and deposits are
matured for repayment. The Company has provided for interest on deposits/debentures/debts upto 30th June, 2002 and not thereafter.
There are also many instances of settlement of debentures, debts and
public deposits at the discounted rates with partiai/fuil waiver of
interest, which has been done with mutual consent. We are also informed
that many of the remainihg depositors/debenture holders/debt holders
have approached the Company for settlement of the dues arid the Company
is in the process for the same.
As per the information given to us various consumer courts (including
the Appellate Authorities/Courts acting under the Consumer Protection
Act) have passed the orders, for the repayment of certain deposits/
debentures/debts with interest and other costs. The detailed
information on these orders not made available to us. However we are
informed that the Company has settled the dues of such customers in
many cases, which also includes settlement at discounted rates with
partial/full waiver of interest and many of the remaining persons have
approached the Company for settlement,
We draw the attention to the Statement made by the Management of the
Company in Note No. 5.01 of the Financial Statement which is as
follows: "Considering the facts that the Company has settled the dues
of depositors/debenture holders/debt holders at the discounted rates as
stated above, that the many of the remaining customers have approached
the Company for settlement of their dues, that the orders issued by the
various consumer courts including the appellate authorities/courts
therein, that the Company has settled the many of such consumer court
cases, that the total debts of the Company reduced considerably because
of settlement as aforesaid and that the Company is explonng the
possibility of framing the new scheme of arrangement, it is not
feasible for the Company to ascertain accurately its liability on any
given date".
Considering all the facts as given above, we qualify our opinion that
it is not feasible for us to ascertain accurately the liability of the
Company as on the date of the Balance Sheet.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the effect of the matter described
in the Basis of Qualified Opinion paragraph, 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, 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.
Emphasis of the matter:
We draw the attention to Note 2.01 of the Financial Statements. The
Company during the year with a view towards restructuring its
liabilities has settled deposits/debentures/subordinated debts at
discounted rates. The same has been done with due consent of the
parties to deposits, debentures and debts. The interest write back
arising out of such settlement is considered as Extraordinary Income in
the Statement of Profit and Loss. Principal write back arising out of
such settlement is considered as capital receipt and taken directly to
Capital Reserve (viz: Capital Reserve 2) in the Balance Sheet. This has
been done as per the accounting policy followed by the Company, as
stated in Note No. 24.01 (J). The Company had made similar settlements
during the earlier years also, by giving the similar accounting
treatment. Our opinion is not qualified on this matter.
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. In terms of press release issued by Reserve Bank of India dated
27.06.2001, we state that:
a) The Certificate of Registration as issued by the Reserve Bank of
India is not in force, since same was cancelled during December 2004.
b) The Company has not obtained credit rating.
c) The capital adequacy ratio is negative and accordingly the Company''s
Loans, advances and investments are above the credit exposure limits.
d) The Company has not filed the prudential returns and annual returns
as per revised directives. However the Company has filed such returns
as per the directives as prevailed till 31st March, 2011 i.e.
prudential returns on half yearly basis and annual return once a year.
e) The public deposits are matured for repayment, but. remained unpaid
by the Company. However the company has settled some of the deposits at
discounted rates without interest. The Company has not provided/paid
interest on deposits after 30th June, 2002.
f) The Company has not created floating charge in favour of the
depositors, on the statutory liquid assets invested.
g) The Company has not closed any of its branches during the year.
Therefore the question of making any comments therein does not arise.
3. 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
Sub-section (3C) of Section 211 of the Companies Act, 1956 read with
the General Circular 15/2013 dated 13th September, 2013 of the Ministry
of Corporate Affairs in respect of Section 133 of the Companies Act,
2013 and
e. We are of the opinion that the Directors of the Company are
disqualified from being appointed as Directors of other public
companies under clause (g) of Sub-section (1) of Section 274 of the
Companies Act, 1956, for the reason that the Company has not fully
discharged its liability towards matured deposits/debentures/
subordinated debts. One of the Directors of the Company Sri Chandappa
R. Sherigar is also the Director of another Company, which has not
fully discharged its liability towards matured deposits/debentures.
Therefore we are also of the opinion that the disqualification under
Section 274(1)(g) of the Act is applicable to him, from becoming the
Director of other Public Companies. However the management of the
Company are of the opinion that its directors are not disqualified u/s
274(1 )(g) of the Companies Act, 1956 for the reasons as stated in note
24.06 of the financial statement. Accordingly the directors have given
the written representation that they are not disqualified u/s 274(1
)(g) of the Companies Act, 1956, to be the directors of the Company,
which has been taken on record by the Board bf Directors.
ANNEXURE TO INDEPENDENT AUDITOR''S REPORT (issued to the Members of
MANIPAL FINANCE CORPORATION LIMITED) REFERRED TO IN PARAGRAPH 1 UNDER
THE HEADING "REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS" OF EVEN
DATE
As required by the Companies (Auditor''s Report) Order 2003 (hereinafter
referred to as "the order"), issued by the Central Government under
Section 227(4A) of the Companies Act, 1956, and on the basis of such
checks as we considered appropriate, and according to the information
and explanations given to us, we further report that
1. a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) According to the information and explanations given to us the fixed
assets other than those under lease, have been physically verified by
the management during the period and no material discrepancies were
noticed on such verification as compared to available records. In
respect of leased assets physical verification has not been done during
the year. However the value of depreciated leased assets is
insignificant. We are also informed that the Company is in the process
of verifying those assets.
c) The Company during the year has not disposed substantial part of its
fixed assets. Hence making further comments as per clause (i) (c ) of
para 4 of the said order does not arise.
2. a) According to the information and explanation given to us,
inventory which consist of the shares and securities, have been
physically verified by the management at regular intervals.
b) In our opinion the procedure of physical verification adopted by the
management is reasonable and adequate having regard to the nature and
size of the company and nature of its business,
c) On the basis of our examination of the records of stock of shares
and debentures, we are of the opinion that the company is maintaining
proper records of stock. During the year no material discrepancies
have been noticed on physical verification of stock.
3. As per the information and explanation given to us, the company
during the year has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under section 301 of the Act. Hence further
commenting on clause (iii) of para 4 of the said order does not arise.
4. In our opinion, According to the information and explanation given
to us, the company has an adequate internal control procedure in
commensurate with its size and nature of business, for the purchase of
inventory and fixed assets and for the sale of assets. There is no
major continuing failure to correct major weakness in internal control
system.
5. In respect of transactions entered in the register maintained in
pursuance of section 301 of the Companies Act, 1956.
a) To the best of our knowledge and belief and according to the
information and explanations given to us, there are no transactions
that needed to be entered into the register, during the year.
b) For the reasons given in sub clause (a) above, the provisions of sub
clause (b) of clause (v) of Para 4 ol the Order is not applicable.
6. In our opinion and according to the information and explanation
given to us the Company has complied with the directives issued by the
Reserve Bank of India, the provision of Section 58A of the Companies
Act, 1956, Companies (Acceptance of Deposit) Rules 1975 and Non Banking
Financial Companies (Reserve Bank Directions) with regard to acceptance
of deposit from public subject to the exception of renewal of deposits
up to 18.01.2000 with maturity dates falling beyond 31st December,
2003, non payment of principal/interest as
and when it became due. Our other observations are being made in main
audit report under the head ''Basis for qualified opinion". However no
fresh deposits accepted/renewed during the year under audit. We are
informed by the management that the company has not received any order
by Company Law Board or Reserve Bank of India or any Court or any other
Tribunal in respect of deposits, except the orders from various
Consumer Courts (including the Appellate Authorities/Courts acting upon
under Consumer Protection Act) regarding repayment of proceeds of
debentures/debts/deposits with interest and other costs. The detailed
information on these are not made available to us. Therefore we are not
in a position to comment on the compliance of aforesaid orders. However
we are informed that the Company has settled the dues of many of such
cases, which also includes settlement at discounted rates. The Company
has also received the order from Reserve Bank of India during December
2004, canceling the certificate of registration.
7. As per the information received and explanations given to us, there
is no internal audit system. Therefore the question of commenting as
required under para 4(vii) of the order does not arise. The management
has given the reason for the same vide Note No. 24.08 of the financial
statements.
8. 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. Therefore the question of making further comments
therein does not arise.
9. a) According to the information and explanation given to us, the
company is regular in depositing with appropriate authorities undisp
-uted statutory dues as detailed in Para 4(ix) (a) of the Order (i.e.
provident fund, employees'' state insurance, income tax, sales tax,
wealth tax, service tax, customs duty, excise duty, cess and other
statutory dues), by remitting them within 6 months from the date they
became payable. The Company has disclosed the matured debentures /
subordinated debts as current liabilities, which are not due to be
transferred to Investor Education and Protection Fund, for the reasons
given in Note. 5.01 of the Accounts. We are informed by the management
that, there are no unclaimed matured deposits/ '' debentures/debts and
interest thereon and therefore the same are not required to be remitted
to the credit of Investor Education and Protection Fund. Accordingly
we are not expressing our opinion on the contribution to the aforesaid
fund.
b) According to the records of the company there are no dues of Sales
Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax Excise Duty, Cess
which have not been deposited due to any dispute.
10. The net worth of the company has been fully eroded. The company has
not incurred cash losses during the current year. The Company has
incurred cash loss in the immediately preceding financial year.
11. Based on our audit and according to the information and the
explanations given to us, we are of the opinion that the company has
during the year defaulted in payment of dues to the debenture holders
amounting Rs. 68043 thousands (P. Y. Rs. 69037 thousands). Interest on
debentures not paid/provided since 1st day of July, 2002. However a
scheme of arrangement was submitted before the Hon''ble High Court of
Karnataka to repay the debenture with interest thereon in the manner
mentioned in the Note No. 5.01 to the financial statements. But the
scheme is since withdrawn and the Company is exploring the possibility
of presenting a new scheme of arrangement, as detailed in Note
No. 5.01 as aforesaid.
12. In our opinion and according to the information and the
explanations given to us, adequate documents and records have been
maintained by the Company in respect of Loans and Advances granted on
the basis of security by way of pledge of shares, debentures and other
securities if any.
13. The company is not a chit fund or a Nidhi or a mutual benefit
fund/society. Therefore clause (xiii) of Para 4 the Companies Auditor''s
Report Order 2003 is not applicable to the Company.
14. The Company has maintained proper records of transactions and
contracts in respect of trading in shares, debentures and other
investments and timely entries have been made therein. On the basis of
records produced before us, we also report that the shares, securities,
debentures and other securities are held by the Company in its own
name, except for the cases if any, covered u/s 49(5) of the Companies
Act, 1956.
15. According to the information and explanation given to us the
company has not given any guarantee for loans taken by others from bank
or financial institution, hence further commenting on this aspect does
not arise.
16. The company has not taken any term loans from banks or financial
institutions during the year. Therefore the question of making comments
as required under Para 4(xvi) does not arise.
17. In our opinion and according to the information and explanation
given to us and on an overall view of the Balance Sheet of the Company,
we report that as the accumulated losses are much more than the own
funds and as majority of the long term funds are overdue and as a
result there are no long term funds, except for Share Capital, Share
Premium, advance received towards sale of property and lease deposits.
Therefore, we are of the opinion that short-term funds amounting to Rs.
277081 thousands (RY. Rs. 281218 thousands) have been utilized for long
term investments, acquisition of Fixed assets, Investments, Bank
Deposits and accumulated losses.
18. During the year the company has not made any preferential allotment
of shares to parties and companies covered in the register maintained
under Section 301 of the Companies Act, 1956.
19. As per our verification and''according to the information and
explanation given to us the company has created securities or charge in
respect of debentures issued.
20. The Company has not raised any money by public issue during the
year and therefore the question of making any comments therein does
riot arise.
21. Based on our audit, which we have conducted in accordance with the
Generally Accepted Auditing Practices in India and according to the
information and explanation given to us we report that no fraud on or
by the company has been noticed or reported during the year.
For PAI NAYAK & ASSOCIATES
Chartered Accountants
Firm''s Registration Number: 009090S
Sd/-
CA ANANTHANARAYANA PAI K.
Place of Signature: MANIPAL Partner
Date : 30th May, 2014 Membership Number 024541
Mar 31, 2012
We have audited the attached Balance Sheet of MANIPAL FINANCE
CORPORATION LIMITED, MANIPAL as at 31st March, 2012, the annexed
Statement of Profit and Loss and Cash Flow Statement for the year ended
on that date. These financial statements are the responsibility of the
management of the Company. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes,
examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
1. As required by the Companies (Auditors' Report) Order, 2003
issued by the Central Government in terms of Section 227(4A) of the
Companies Act, 1956, we give in the annexure statement on the matters
specified in Paragraphs 4 and 5 of the said order, to the extent
applicable to the Company.
2. Further to our comments in the Annexure referred to in Paragraph
(1) above, 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 & Cash Flow
Statement referred to in this report are in agreement with the
examination of those books.
d) In our opinion, the Balance Sheet, Statement of Profit and Loss &
Cash Flow Statement, dealt with by this report, have been prepared in
compliance with the Accounting Standards referred to in Section 211(3C)
of the Companies Act,1956.
e) On the basis of written representations received from the Directors
as on 31st March, 2012 and taken on record by the Board of Directors
and subject to note no.24.06 we report that none of the directors are
disqualified as on 31st March, 2012 from being appointed as Director in
terms of Clause (g) of Sub-Section 1 of Section 274 of the Companies
Act,19566.
f) In terms of press release issued by Reserve Bank of India dated
27.06.2001, we state that:
i) The Certificate of Registration as issued by the Reserve Bank of
India is not in force, since same was cancelled during December,2004.
ii) The Company has not obtained credit rating.
iii) The capital adequacy ratio is negative and accordingly the
Companies; Loans, advances and investments are above the credit
exposure limits.
iv) The Company has not filed the prudential returns and annual returns
as per revised directives. However the Company has filed such returns
as per the directives as prevailed till 31st March, 2011 i.e prudential
returns on half yearly basis and annual return once a year.
v) The public deposits are matured for repayment, but remained unpaid
by the Company. However the company has settled some of the deposits at
discounted rates without interest. The Company has not provided/paid
interest on deposits after 30th June, 2002.
vi) The Company has not created floating charge in favour of the
depositors, on the statutory liquid assets invested.
vii) The Company has not strictly adhered RBI guidelines on closure of
branches.
3. a) We draw attention to Note No.24.02 of the financial statements.
The Company has incurred losses and its majority of funds are blocked
in Non Performing Assets, raising a doubt about the Company to continue
as a going concern. The Company has presented a scheme of arrangement
for restructure of liabilities as detailed in Note No.5.01 of the
financial statements and subsequently withdrawn the same, for reasons
given therein. The Company is exploring the possibility of presenting
the new scheme of arrangement, as detailed in the aforesaid Notes. The
account, however have been prepared on a "going concern basis" in
view of management perception as detailed in Note No.24.02 as
aforesaid. However we are unable to comment on the ultimate reliability
of Company's assets including the Fixed Assets under lease.
b) The Company has stopped (i) repayment of matured debentures &
matured subordinated debts and (ii) payment of interest on debentures
and subordinated debts from 1st day of July 2002, in view of the scheme
of arrangement imposed before the Honble High Court of Karnataka, as
referred to in Note No 5.01 of the financial statement (which is since
withdrawn and we are informed that the Company is exploring the
possibility presenting a new scheme of arrangement). Accordingly
Interest on debentures/debts are provided up to 30th June, 2002 only and
not thereafter. The Company has also not provided for the interest on
public deposits from 1st July 2002. However all the public deposits are
matured for repayment and remained unpaid as on the date of the Balance
Sheet. No provision for interest on such debentures/debts/ deposits is
being made during the year under audit. The effect on the loss is not
ascertainable, since the Company has not quantified such interest.
There are also instances of settlement of debentures, debts and public
deposits as stated in note no. 2.01 of the financial statements. As per
the information given to us various consumer courts (including the
Appellate Authorities/Courts acting under the Consumer Protection Act)
have passed the orders, for the repayment of certain
deposits/debentures/debts with interest and other costs. The detailed
information on these orders not made available to us and therefore we
are unable to ascertain the ultimate effect on the profit/loss, on
account of the aforesaid orders.
c) We draw the attention to note no. 24.10 of financial statement,
wherein the management has explained the reason for earning the profit
during the year under audit. The Company would have incurred loss, if
the income as stated in the aforesaid note (i.e. exceptional/extra
ordinary incomes and revenue earned on settlement with the borrowers )
were not earned.
4. Subject to the comments made in paragraph 2(e), 2(f) and paragraph
3 above, in our opinion and to the best of our information and
according to the explanations given to us, the said financial
statements together with the notes thereon and in particular note no
2.01 on write back of deposits/debenture/subordinated debts & treatment
of principal write back as capital receipt, note no 5.02, on balances
of deposits/interest lying in sundry creditors pending reconciliation,
note no 5.03 & 3.01, on adequacy of security of debenture considering
the provisions made & agreement to sell the property as detailed
therein, note no. 6.01 regarding adjustment of revalued portion of
lease hold land to revaluation reserve on termination of lease, note
no. 21.01 on treating the provision reversal, bad debts written off &
bad debts recovered as exceptional item, note No 24.07, on impairment
of assets, Note No 4.01 on provision for leave encashment on estimated
basis, rather than opting for actuarial valuation Note 19.01 disclosing
lease equalization credit as reduction from depreciation,, give the
information required under the Companies Act, 1956, in the manner so
required and give a true and fair view in conformity with the
accounting principles generally accepted in India:-
(i) In so far as it relates to Balance Sheet, of the State of Affairs
of the Company as at 31st March, 2012.
(ii) In so far as it relates to the Statement of Profit and Loss, of
the profit for the year ended on that date.
(iii) In so far as it relates to the Cash Flow Statement, of the cash
flows of the Company for the year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORS' REPORT OF EVEN
DATE
1. a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) According to the information and explanations given to us the fixed
assets other than those under lease, have been physically verified by
the management during the period and no material discrepancies were
noticed on such verification as compared to available records. In
respect of leased assets physical verification has not been done during
the year. However the value of depreciated leased assets is
insignificant. We are also informed that the Company is in the process
of verifying those assets.
c) The Company during the year has not disposed substantial part of its
fixed assets. Hence making further comments as per Clause (i) (c) of
para 4 of the said order does not arise.
2. a) According to the information and explanation given to us,
inventory which consist of the shares and securities, have been
physically verified by the management at regular intervals.
b) In our opinion the procedure of physical verification adopted by the
management is reasonable and adequate having regard to the nature and
size of the company and nature of its business.
c) On the basis of our examination of the records of stock of shares
and debentures, we are of the opinion that the company is maintaining
proper records of stock. During the year no material discrepancies have
been noticed on physical verification of stock.
3. As per the information and explanation given to us, the company
during the year has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under Section 301 of the Act. Hence further
commenting on Clause (iii) of Para 4 of the said order
4. In our opinion, according to the information and explanation given
to us, the company has an adequate internal control procedure in
commensurate with its size and nature of business, for the purchase of
inventory and fixed assets and for the sale of assets. There is no
major continuing failure to correct major weakness in
5. In respect of transactions entered in the register maintained in
pursuance of Section 301 of the Companies act,1956.
a) To the best of our knowledge and belief and according to the
information and explanations given to us, there are no transactions
that needed to be entered into the register, during the year.
b) For the reasons given in sub Clause (a) above, the provisions of sub
Clause (b) of Clause (v) of Para 4 of the Order is not applicable.
6. In our opinion and according to the information and explanation
given to us the Company has complied with the directives issued by the
Reserve Bank of India, the provision of Section 58A of the Companies
Act, 1956, Companies (Acceptance of Deposit) Rules, 1975 and Non
Banking Financial Companies (Reserve Bank Directions) with regard to
acceptance of deposit from public subject to the exception of renewal
of deposits up to 18.01.2000 with maturity dates falling beyond 31st
December, 2003, non payment principal/ interest as and when it became
due. Our other observations are being made in Para 2 (f) of main audit
report, however no fresh deposits accepted/renewed during the year
under audit. We are informed by the management that the company has not
received any order by Company Law Board or Reserve Bank of India or any
Court or any other Tribunal in respect of deposits, except the orders
from various Consumer Courts (including the Appellate
Authorities/Courts acting upon under Consumer Protection Act) regarding
repayment of proceeds of debentures/debts/deposits with interest and
other costs. The detailed information on these are not made available
to us. Therefore we are not in a position to comment on the compliance
of aforesaid orders. The Company has also received the order from
Reserve Bank of India during December 2004, canceling the certificate
of registration.
7. As per the information received and explanations given to us, there
is no internal audit system. Therefore the question of commenting as
required under Para 4(vii) of the Order does not arise. The management
has given the reason for the same vide Note No. 24.08 of the financial
statements.
8. 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. Therefore the question of making further comments
therein does not arise.
9. a) According to the information and explanation given to us, the
company is regular in depositing with appropriate authorities
undisputed statutory dues as detailed in Para 4(ix) (a) of the Order
(i.e. provident fund, employees' state insurance, income tax, sales
tax, wealth tax, service tax, customs duty, excise duty, cess and other
statutory dues), by remitting them within 6 months from the date they
became payable. The Company has disclosed the matured debentures
/subordinated debts as current liabilities, which are not due to be
transferred to Investor Education and Protection Fund, for the reasons
given in Note. 5.01 of the Accounts. We are informed by the management
that, there are no unclaimed matured deposits and interest thereon and
therefore the same are not required to be remitted to the credit of
Investor Education and Protection Fund. Accordingly we are not
expressing our opinion on the contribution to the aforesaid fund.
b) According to the records of the company there are no dues of Sales
Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty,
Cess which have not been deposited due to any dispute.
10. The net worth of the company has been fully eroded. The company
has not incurred cash losses during the current year and also in the
immediately preceding financial year. We have considered the
exceptional items, extra ordinary items and lease equalization credit
as the cash item, to arrive at the aforesaid conclusion.
11. Based on our audit and according to the information and the
explanations given to us, we are of the opinion that the company has
during the year defaulted in payment of dues to the debenture holders
amounting Rs. 70093 thousands (P Y Rs. 79963 thousands). Interest on
debentures not paid since 1st day of July 2002. However a scheme of
arrangement was submitted before the Honble High Court of Karnataka to
repay the debenture with interest thereon in the manner mentioned in
the Note No. 5.01 to the financial statements. But the scheme is since
withdrawn and the Company is exploring the possibility of presenting a
new scheme of arrangement, as detailed in Note No. 5.01 as aforesaid.
12. In our opinion and according to the information and the
explanations given to us, adequate documents and records have been
maintained by the Company in respect of Loans and Advances granted on
the basis of security by way of pledge of shares, debentures and other
securities if any.
13. The company is not a chit fund or a Nidhi or a mutual benefit fund
/society. Therefore clause (xiii) of Para 4 the Companies Auditor's
Report Order 2003 is not applicable to the Company.
14. The Company has maintained proper records of transactions and
contracts in respect of trading in shares, debentures and other
investments and timely entries have been made therein. On the basis of
records produced before us, we also report that the shares, securities,
debentures and other securities are held by the Company in its own
name, except for the cases if any, covered u/s 49(5) of the Companies
Act, 1956.
15. According to the information and explanation given to us the
company has not given any guarantee for loans taken by others from bank
or financial institution, hence further commenting on this aspect does
not arise.
16. The company has not taken any term loans from banks or financial
institutions during the year. Therefore the question of making comments
as required under Para 4(xvi) does not arise.
17. In our opinion and according to the information and explanation
given to us and on an overall view of the Balance Sheet of the Company,
we report that as the accumulated losses are much more than the own
funds and as majority of the long term funds are overdue and as a
result there are no long term funds, except for Share Capital, Share
Premium, advance received towards sale of property and lease deposits.
Therefore, we are of the opinion that short-term funds amounting to
Rs.2,88,127 thousands (P Y Rs.3,37,255 thousands) have been utilized
for long term investments, acquisition of Fixed assets, Investments,
Bank Deposits and
18. During the year the company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
19. As per our verification and according to the information and
explanation given to us the company has created securities or charge in
respect of debentures issued.
20. The Company has not raised any money by public issue during the
year and therefore the question of making any comments therein does not
arise.
21. Based on our audit, which we have conducted in accordance with the
Generally Accepted Auditing Practices in India and according to the
information and explanation given to us we report that no fraud on or
by the company has been noticed or reported during the year.
For PAI NAYAK & ASSOCIATES
Chartered Accountants
Registration Number: 009090S
sd/-
Place: Udupi Ammunje Venkatesh Nayak
Partner
Date: 30.05.2012 Membership No: 204685
Mar 31, 2010
We have audited the attached Balance Sheet of MANIPAL FINANCE
CORPORATION LIMITED, MANIPAL as at 31 st March, 2010, the annexed
Profit and Loss Account and Cash Flow Statement for the year ended on
that date. These financial statements are the responsibility of the
management of the Company. Our responsibility is to express an opinion
on these financial statements based on our audit.
We conducted our audit in accordance with auditing standards generally
accepted in India. Those Standards require that we plan and perform the
audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes,
examining on a test basis, evidence supporting the amounts and
disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management, as well as evaluating the overall presentation of
the financial statements. We believe that our audit provides a
reasonable basis for our opinion.
1. As required by the Companies (Auditors Report) Order, 2003 issued
by the Central Government in terms of Section 227(4A) of the Companies
Act, 1956, we give in the annexure statement on the matters specified
in Paragraphs 4 and 5 of the said order, to the extent applicable to
the Company.
2. Further to our comments in the Annexure referred to in Paragraph
(1) above, 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, Profit and Loss Account & Cash Flow Statement
referred to in this report are in agreement with the books of account.
d) In our opinion, the Balance Sheet, Profit and Loss Account & Cash
Flow Statement, dealt with by this report, have been prepared in
compliance with the Accounting Standards referred to in Section 211(3C)
of the Companies Act, 1956.
e) On the basis of written representations received from the Directors
as on 31st March, 2010 and taken on record by the Board of Directors
and subject to Note No. 11(19) to the Schedule K we report that none of
the directors are disqualified as on 31st March, 2010 from being
appointed as Director in terms of Clause (g) of Sub-Section 1 of
Section 274 of the Companies Act 1956 .
f) In terms of press release issued by Reserve Bank of India dated
27-06-2001, we state that:
i) The Certificate of Registration as issued by the Reserve Bank of
India is not in force, since same was cancelled during December 2004.
ii) The Company has not obtained credit rating.
iii) The capital adequacy ratio is negative and accordingly the
Companies; Loans, advances and investments are above the credit
exposure limits.
iv) The public deposits are matured for repayment, but remained unpaid
by the Company. However the company has settled some of the deposits at
discounted rates without interest. The Company has not provided/paid
interest on deposits after 30th June, 2002.
v) The Company has not created floating charge in favour of the
depositors, on the statutory liquid assets invested.
vi) The Company has not strictly adhered RBI guidelines on closure of
branches.
3. a) We draw attention to Note No. II (2) of Schedule "K" in the
financial statements. The Company has incurred losses and its majority
of funds are blocked in Non performing Assets, raising a doubt about
the Company to continue as a going concern. The Company has presented a
scheme of arrangement for restructure of liabilities as detailed in
Note No. II (1) of Schedule "K" in the financial statements and
subsequently withdrawn the same, for reasons given therein. The Company
is exploring the possibility of presenting the new scheme of
arrangement, as detailed in the aforesaid Notes. The account, however
have been prepared on a "going concern basis" in view of management
perception as detailed in Note No. II (2) of Schedule K. However we
are unable to comment on the ultimate reliability of Companys assets
including the Fixed Assets under lease.
b) Provision has not been made for Non-performing Assets amounting to
Rs. 170,00 thousands (P.Y. Rs. 5,41,82 thousands) under Reserve Bank of
India Prudential Norms. (Refer Note No. 11(4) of Schedule K).
c) The Company has stopped (i) repayment of matured debentures &
matured subordinated debts and (ii) payment of interest on debentures
and subordinated debts from 1st day of July 2002, in view of the scheme
of arrangement proposed before the Hon ble High Court of Karnataka, as
referred to in Note No. 11(1) of Schedule K to the financial statement
(which is since withdrawn and we are informed that the Company is
exploring the possibility presenting a new scheme of arrangement).
Accordingly Interest on debentures/ debts are provided up to 30th June,
2002 only. The Company has also not provided for the interest on public
deposits from 1st July 2002. However all the public deposits are
matured for repayment and remained unpaid as on the date of the Balance
Sheet. No provision for interest on such debentures/debts/deposits is
being made during the year under audit. The effect on the loss is not
ascertainable, since the Company has not quantified such interest.
There are also instances of settlement of debentures, debts and public
deposits as stated in Note No. II (5) of Schedule K. As per the
information given to us various consumer courts (including the
Appellate Authorities/Courts acting under the Consumer Protection Act)
have passed the orders, for the repayment of certain
deposits/debentures/debts with interest and other costs. The detailed
information on these orders not made available to us and therefore we
are unable to ascertain the ultimate effect on the profit/loss, on
account of the aforesaid orders.
d) We further report that had the observation made in 3 (b) above, been
considered loss for the year, would have been Rs.184,03 thousands (P.Y.
Rs. 5,17,47 thousands) (as against reported figures of loss Rs.14,03
thousands {P.Y. Profit Rs.24,35 thousands}) and accumulated losses
would have been Rs. 68,50,58 thousands (P.Y. Rs. 72,08,37 thousands)
(as against the reported figure of Rs.66,80,58 thousands {P.Y. Rs.
66,66,55 thousands}), (without considering the non-provision of
interest and other costs as detailed in para (c) above.)
4. Subject to the comments made in paragraph 2(e), 2(f) and paragraph 3
above, in our opinion and to the best of our information and according
to the explanations given to us, the said financial statements together
with the notes thereon and in particular Note No. II (5) of Schedule K,
on write back of deposits/debenture/subordinated debts & treatment of
principal write back as capital receipt, Note No. II (6) of Schedule K,
on balances of deposits/interest lying in sundry creditors pending
reconciliation, Note No. II (7) & II (8) of Schedule K, on adequacy of
security of debenture considering the provisions made & agreement to
sell the property as detailed therein & disclosing such debentures as
Current Liabilities, Note No. 2(11) regarding adjustment of revalued
portion of lease hold land to revaluation reserve on termination of
lease, Note No. II (20) of Schedule K, on impairment of assets, Note
No. 11(23) provision for leave encashment on estimated basis, rather
than opting for actuarial valuation, give the information required
under the Companies Act, 1956, in the manner so required and give a
true and fair view in conformity with the accounting principles
generally accepted in India:-
(i) In so far as it relates to Balance Sheet, of the State of Affairs
of the Company as at 31st March, 2010
(ii) In so far as it relates to the Profit and Loss Account, of the
loss for the year ended on that date.
(iii) In so far as it relates to the Cash Flow Statement, of the cash
flows of the Company for the year ended on that date.
ANNEXURE REFERRED TO IN PARAGRAPH 1 OF THE AUDITORSREPORT OF EVEN DATE
1. a) The Company has maintained proper records showing full
particulars including quantitative details and situation of fixed
assets.
b) According to the information and explanations given to us the fixed
assets other than those under lease, have been physically verified by
the management during the period and no material discrepancies were
noticed on such verification as compared to available records. In
respect of leased assets physical verification has not been done during
the year. However the value of depreciated leased assets is
insignificant. We are also informed that the Company is in the process
of verifying those assets.
c) The Company during the year has not disposed substantial part of its
fixed assets. Hence making further comments as per Clause (i) (c) of
Para 4 of the said order does not arise.
2. a) According to the information and explanation given to us,
inventory which consist of the shares and securities, have been
physically verified by the management at regular intervals.
b) In our opinion the procedure of physical verification adopted by the
management is reasonable and adequate having regard to the nature and
size of the company and nature of its business.
c) On the basis of our examination of the records of stock of shares
and debentures, we are of the opinion that the company is maintaining
proper records of stock. During the year no material discrepancies have
been noticed on physical verification of stock.
3. As per the information and explanation given to us, the company
during the year has neither granted nor taken any loans, secured or
unsecured to/from companies, firms or other parties covered in the
register maintained under Section 301 of the Act. Hence further
commenting on Clause (iii) of Para 4 of the said order does not arise.
4. In our opinion, according to the information and explanation given
to us, the company has an adequate internal control procedure in
commensurate with its size and nature of business, for the purchase of
inventory and fixed assets and for the sale of assets. There is no
major continuing failure to correct major weakness in internal control
system.
5. In respect of transactions entered in the register maintained in
pursuance of Section 301 of the Companies Act, 1956.
a) To the best of our knowledge and belief and according to the
information and explanations given to us, there are no transactions
that needed to be entered into the register, during the year.
b) For the reasons given in Sub-clause (a) above, the provisions of
Sub-clause (b) of Clause (v) of Para 4 of the Order is not applicable.
6. In our opinion and according to the information and explanation
given to us the Company has complied with the directives issued by the
Reserve Bank of India, the provision of Section 58A of the Companies
Act, 1956, Companies (Acceptance of Deposit) Rules 1975 and Non-Banking
Financial Companies (Reserve Bank Directions) with regard to acceptance
of deposit from public subject to the exception of renewal of deposits
up to 18-01-2000 with maturity dates falling beyond 31st December,
2003, non-payment principal/interest as and when it became due. Our
other observations are being made in Para 2 (f) of main audit report.
However no fresh deposits accepted/renewed during the year under audit.
We are informed by the management that the company has not received any
order by Company Law Board or Reserve Bank of India or any Court or any
other Tribunal in respect of deposits, except the orders from various
Consumer Courts (including the Appellate Authorities/Courts acting upon
under Consumer Protection Act) regarding repayment of proceeds of
debentures/debts/deposits with interest and other costs. The detailed
information on these are not made available to us. Therefore we are not
in a position to comment on the compliance of aforesaid orders. The
Company has also received the order from Reserve Bank of India during
December 2004, canceling the certificate of registration.
7. As per the information received and explanations given to us, there
is no internal audit system. Therefore the question of commenting as
required under Para 4(vii) of the order does not arise. The management
has given the reason for the same vide Note No. 11(22) of Schedule K to
the financial statements.
8. 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. Therefore the question of making further comments
therein does not arise.
9. a) According to the information and explanation given to us, the
company is regular in depositing with appropriate authorities
undisputed statutory dues as detailed in Para 4(ix) (a) of the Order
(i.e. provident fund employees state insurance, income tax, sales tax,
wealth tax, service tax, customs duty, excise duty, cess and other
statutory dues), by remitting them within 6 months from the date they
became payable. The Company has disclosed the matured
debentures/subordinated debts as current liabilities, which are not due
to be transferred to Investor Education and Protection Fund, for the
reasons given in Note II (1) of the Schedule K of the Accounts. We are
informed by the management that, there are no unclaimed matured
deposits and interest thereon and therefore the same are not required
to be remitted to the credit of Investor Education and Protection Fund.
Accordingly we are not expressing our opinion on the contribution to
the aforesaid fund.
b) According to the records of the company there are no dues of Sales
Tax, Income Tax, Custom Duty, Wealth Tax, Service Tax, Excise Duty,
Cess which have not been deposited due to any dispute.
10. The net worth of the company has been fully eroded. The company
has not incurred cash losses during the current year and also in the
immediately preceding financial year. Had the Company provided for the
Non-Performing Assets fully (as detailed in Note No. II (4) of Schedule
K, the Company would have incurred the Cash Losses.
11. Based on our audit and according to the information and the
explanations given to us, we are of the opinion that the company has
during the year defaulted in payment of dues to the debenture holders
amounting Rs. 868 Lakhs (P.Y. Rs.1046 Lakhs). Interest on debentures
not paid since 1st day of July, 2002. However a scheme of arrangement
was submitted before the Honble High Court of Karnataka to repay the
debenture with interest thereon in the manner mentioned in the Note No.
11(1) of Schedule K to the financial statements. But the scheme is
since withdrawn and the Company is exploring the possibility of
presenting a new scheme of arrangement, as detailed in Note No. 11(1)
of the Schedule K to the Accounts.
12. In our opinion and according to the information and the
explanations given to us, adequate documents and records have been
maintained by the Company in respect of Loans and Advances granted on
the basis of security by way of pledge of shares, debentures and other
securities if any.
13. The company is not a chit fund or a Nidhi or a mutual benefit
fund/society. Therefore Clause (xiii) of Para 4 the Companies Auditors
Report Order 2003 is not applicable to the Company.
14. The Company has maintained proper records of transactions and
contracts in respect of trading in shares, debentures and other
investments and timely entries have been made therein. On the basis of
records produced before us, we also report that the shares, securities,
debentures and other securities are held by the Company in its own
name, except for the cases if any, covered u/s 49(5) of the Companies
Act, 1956.
15. According to the information and explanation given to us the
company has not given any guarantee for loans taken by others from bank
or financial institution, hence further commenting on this aspect does
not arise.
16. The company has not taken any term loans from banks or financial
institutions during the year. Therefore the question of making comments
as required under Para 4(xvi) does not arise.
17. In our opinion and according to the information and explanation
given to us and on an overall view of the Balance Sheet of the Company,
we report that as the accumulated losses are much more than the own
funds and as majority of the long-term funds are overdue and as a
result there are no long term funds, except for Share Capital & Share
Premium. Therefore, we are of the opinion that short-term funds
amounting to Rs. 3,94,516 thousands (P. Y. Rs. 4,31,531 thousands) have
been utilized for long-term investments, acquisition of fixed assets,
loans & advances. Hire Purchase etc. and accumulated losses.
18. During the year the company has not made any preferential
allotment of shares to parties and companies covered in the register
maintained under Section 301 of the Companies Act, 1956.
19. As per our verification and according to the information and
explanation given to us the company has created securities or charge in
respect of debentures issued.
20. The Company has not raised any money by public issue during the
year. Therefore the question of making further comments therein does
not arise.
21. Based on our audit, which we have conducted in accordance with the
Generally Accepted Auditing Practices in India and according to the
information and explanation given to us we report that no fraud on or
by the company has been noticed or reported during the year.
For PAI NAYAK & ASSOCIATES
Chartered Accountants
Registration Number: 009090S
Sd/-
Place : Udupi Ammunje Venkatesh Nayak
Date : 29-05-2010 Partner
(Membership No.: 204685)
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