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INDEPENDENT AUDITORS? REPORT
TO THE MEMBERS OF IFCI LIMITED
Report on the Standalone Financial Statements
We have audited the accompanying standalone financial statements of IFCI Limited (?the Company?), which comprises the Balance Sheet as at March 31, 2015, the Statement of Profit and Loss, the Cash Flow Statement for the year then ended, and a summary of significant accounting policies and other explanatory information.
Management?s Responsibility for the Financial Statements
The Company?s Board of Directors is responsible for the matters stated in Section 134(5) of the Companies Act, 2013 (?the Act?) with respect to the preparation of these standalone financial statements that give a true and fair view of the financial position, financial performance and cash flows of the Company in accordance with the accounting principles generally accepted in India, including the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014. This responsibility also includes maintenance of adequate accounting records in accordance with the provisions of the Act for safeguarding 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 financial statements that give a true and fair view and are free from material misstatement, whether due to fraud or error.
Our responsibility is to express an opinion on these standalone financial statements based on our audit. We have taken into account the provisions of the Act, the accounting and auditing standards and matters which are required to be included in the audit report under the provisions of the Act and the Rules made there under.
We conducted our audit in accordance with the Standards on Auditing specified under Section 143(10) of the Act. Those Standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement.
An audit involves performing procedures to obtain audit evidence about the amounts and the disclosures in the financial statements. The procedures selected depend on the auditor?s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal financial control relevant to the Company?s preparation of the financial statements that give a true and fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on whether the Company has in place an adequate internal financial control system over financial reporting and the operating effectiveness of such controls. An audit also includes evaluating the appropriateness of the accounting policies used and the reasonableness of the accounting estimates made by the Company?s Directors, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion on the standalone financial statements.
In our opinion and to the best of our information and according to the explanations given to us, the aforesaid standalone financial statements give the information required by the Act in the manner so required and give a true and fair view in conformity with the accounting principles generally accepted in India, of the state of affairs of the Company as at March 31, 2015, its profit and its cash flow for the year ended on that date.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditor?s Report) Order, 2015 (?the Order?) issued by the Central Government of India in terms of Sub–Section (11) of Section 143 of the Act, we give in the Annexure I a statement on the matters specified in paragraphs 3 and 4 of the Order.
2. As required under Section 143(5) of the Companies Act, 2013, we enclose herewith, as per Annexure II, our report for the Company on the directions issued by the Comptroller & Auditor General of India.
3. 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 Accounts 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 and the Statement of Profit and Loss dealt with by this report are in agreement with the books of accounts.
(d) In our opinion, the aforesaid standalone financial statements comply with the Accounting Standards specified under Section 133 of the Act, read with Rule 7 of the Companies (Accounts) Rules, 2014.
(e) On the basis of the written representations received from the directors as on March 31, 2015 taken on record by the Board of Directors, none of the directors is disqualified as on March 31, 2015 from being appointed as a director in terms of Section 164 (2) of the Act.
(f) With respect to the other matters to be included in the Auditor?s Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules, 2014, in our opinion and to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financial position in its financial statements ? Refer Note No. 25.1 to the financial statements;
ii. The Company has made provision, as required under the applicable law or accounting standards, for material foreseeable losses, if any, on long–term contracts including derivative contracts ? Refer Note No. 25.3 to the financial statements;
iii. There has been no delay in transferring amounts, required to be transferred, to the Investor Education and Protection Fund by the Company
Annexure I referred to in paragraph 1 of Report on Other Legal and Regulatory Requirements of our report of even date
(i) (a) The Company has maintained proper records showing full particulars including quantitative details and situation of fixed assets,except for leased plant and machinery having gross block of Rs. 70.92 crore (PY ? Rs. 70.92 crore) which have been fully depreciated.
(b) The fixed assets are being physically verified by the management at all its offices in a phased manner at reasonable intervals. According to the information and explanation given to us, no material discrepancies were noticed on such verification. However, the policy with regard to the verification of physical assets and the periodicity thereof needs to be reviewed and approved by the Board.
(ii) The Company is a Systemically Important Non–Banking Financial Company, accordingly it does not hold any inventory. Thus, paragraph 3(ii) of the Order is not applicable.
(iii) According to the information provided 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 mentioned under Section 189 of the Companies Act, 2013.
(iv) The present ERP of the company requires up–gradation and Information Systems audit to test the designing and effectiveness of the automated controls. Except as above, in our opinion and according to the information and explanations given to us, generally there is an adequate internal control system commensurate with the size of the company and nature of its business, for the purchase of fixed assets and for the sale of services. In our opinion and according to the information and explanations given to us, there is no continuing failure to correct major weaknesses in internal control system.
(v) According to the information provided and explanations given to us, the Company has not accepted any deposits from the public during the year within the meaning of Section 73 to 76 of the Companies Act, 2013.
(vi) According to the information provided and explanation given to us, maintenance of cost records by the Company has not been prescribed by the Central Government under Section 148(1) of the Companies Act, 2013. Thus, paragraph 4(vi) of the Order is not applicable.
(vii) (a) According to the information provided and explanations given to us, the company is generally regular in depositing undisputed statutory dues including provident fund, employee?s state, income tax, sales tax, wealth tax, service tax, duty of customs, duty of excise, value added tax, cess and other material statutory dues applicable to it with the appropriate authorities. There are no outstanding statutory dues existing as at the last day of the financial year for a period of more than six months from the day they became payable.
(b) According to the information and explanations given to us, there were no amounts due as on March 31, 2015 in respect of income tax or sales tax or wealth tax or service tax or duty of customs or duty of excise or value added tax or cess which have not been deposited on account of any dispute other than those indicated below:
(c) According to the information provided and explanations given to us, the amount required to be transferred to Investor Education and Protection Fund in accordance with the relevant provisions of the Companies Act, 1956 (1 of 1956) and rules made there under has been transferred to such fund within time.
(viii) There are no accumulated losses at the end of the financial year and the Company has not incurred cash losses during the financial year covered by our audit report and in the immediately preceding financial year.
(ix) According to the information provided and explanations given to us, the Company has not defaulted in repayment of dues to a financial institution or bank or debenture holders.
(x) According to the information provided and explanations given to us, the Company has given guarantees for loans taken by others, Performance Guarantees and Letters of Comforts for subsidiaries and others. The terms and conditions of these guarantees and Letters of Comfort are not prima facie prejudicial to the interests of the Company.
(xi) In our opinion and according to the information provided and explanations given to us, the term loans availed by the Company were applied for the purpose for which they were obtained.
(xii) During the year, the company has reported fraud by one of its borrower company where the borrower has induced the company to reschedule its outstanding loan facilities on false assurances and forged documents by inflating the value of security by Rs. 81 crore.
For ASA & Associates LLP
Membership No. 088810
For ANDROS & CO.
Membership No. 093714
Place : New Delhi
Date : May 26, 2015