SENSEX NIFTY
DCM Financial | Auditor's Report > Finance - Leasing & Hire Purchase > Auditor's Report from DCM Financial - BSE: 511611, NSE: DCMFINSERV
YOU ARE HERE > MONEYCONTROL > MARKETS > FINANCE - LEASING & HIRE PURCHASE > AUDITORS REPORT - DCM Financial
DCM Financial
BSE: 511611|NSE: DCMFINSERV|ISIN: INE891B01012|SECTOR: Finance - Leasing & Hire Purchase
SET ALERT
|
ADD TO PORTFOLIO
|
WATCHLIST
LIVE
BSE
, 16:01
0.69
0
VOLUME 5
DCM Financial is not traded in the last 30 days
« Mar 13
Auditor's Report (DCM Financial) Year End : Mar '14
We have audited the accompanying financial statements of DCM Financial
 Services 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 infbrmation.
 
 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 (3C) 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 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 Company''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 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 Qualified Opinion
 
 (i) Recognition of rental income of Rs. 68.26 lacs during the financial
 year ended 31st March, 2014 which should not have been recognized in
 view of uncertainty in realization of such income & also non provision
 of doubtful debts against rental receivable of Rs. 499.43 lacs
 pertaining to previous years which have not yet been realized. Had
 these been rectified in the financial statements, the net loss for the
 year ended 31 March, 2014 and cumulative net loss as at 31stMarch,
 2014 would have been overstated by Rs 68.26 Lacs and Rs 567.69 Lacs
 respectively.  Similarly Current Assets would have been understated by
 Rs 567.69 Lacs.
 
 (ii) No provision of Rs 826.38 Lacs (Rs 14020.03 Lacs towards
 accumulated Interest as at 31stMarch, 2014) which is simple interest
 calculated @10% per annum as stipulated in the Fresh Restructuring
 Scheme filed before Hon''ble Delhi High Court, towards Interest on
 Debentures, Term Loans & Bank, Fixed Deposits and Inter Corporate
 Deposits, have been provided in the financial statements. Had these
 been provided for in the financial statements, the net loss for the
 year ended 31* March, 2014 and cumulative net loss as welt as Current I
 Non Current Liabilities as at 31st March, 2014 would have been
 overstated by Rs. 826.38 Lacs and Rs. 14020.03 Lacs respectively. This
 is a contravention of the Accounting Standard 1 on Disclosure of
 Accounting Policies issued by Ministry of Corporate Affairs, Government
 of India. The same has been explained in Note 4.1.f, Note4.1.g.(i),
 Note4.2.c&4.2.d, Note 4.3.2, Note 4.3.3, Note 4.4(f) and Note 4.6.
 
 (iii) For redemption of debentures of Rs 8.75 Lacs, debenture
 redemption reserve is required to be created. Debenture redemption
 reserve of Rs 8.75 lacs has not been created due to insufficient
 profits. The same has been explained in Note 2.2.
 
 (iv) The value of assets charged as security in favor of banks,
 debenture-holders & financial institutions have been depleted over a
 period of time. The depletion has not yet been ascertained by the
 Company. To the extent of shortfall, if any, the liability is
 unsecured, whereas the same has been shown as secured. The same has
 been explained in Note 4.1.d and Note 4.2.b&4.3.1.
 
 (v) Fixed Deposits and Bills Payable as per Fixed Deposit Register
 maintained by the Company are Rs. 5642.96 lacs whereas the same as per
 financials books comes to Rs. 5632.27 lacs. Their is a difference of
 Rs. 10.69 lacs which is un-reconciled in the Fixed Deposit Register.
 The reason is either lack of identification of depositors or no claim
 or confirmation having been received by the company. The provision of
 such differential amount has not been made in the books of accounts.
 The provision of such differential amount has not been made. The same
 has been explained in Note 4.4.(d) & Note 4.4.(e).
 
 (vi) Due to liquidity crisis in the past, minimum liquid assets @ 15%
 of Fixed Deposits as per directives of Reserve Bank of India under Non
 Banking Company Prudential Norms, has not been maintained by the
 company. The company has applied to RBI and Company Law Board for
 exemption from maintaining minimum liquid assets and payment of penal
 interest but the disposal of the application is still pending. The same
 has been explained in Note 4.4.(g).
 
 (vii) Till June, 2007, Group Companies funded expenditure or repayments
 made by the company worth Rs. 549.71 Lacs. The same has been shown or
 credited to the Share Application Account in the financial statements
 of the Company. Company had already passed special resolution to allot
 appropriate shares, however the same is subject to sanction of Fresh
 Restructuring Scheme by the Hon''ble Delhi High Court. In view of
 pending approval or acceptance of Fresh Restructuring Scheme in the
 Hon''ble Delhi High Court, no shares either have been allotted by the
 Company or repaid or refunded the said share application money. As per
 Section 73(2) of the Companies Act, 1956, Interest is payable against
 such share application money. Company has not made any provision in the
 financials towards Interest payable on the unpaid amount of share
 application money in compliance with Section 73(2) of the Companies
 Act, 1956. The company has not attempted to determine the financial
 impact, accordingly the financial impact of the same is not
 ascertainable.
 
 (viii) The accounts and financials of the company have been prepared on
 going concern on the assumption and premises made by the management of
 the Company that (a) The fresh restructuring scheme would be approved
 by the Hon''ble Delhi High Court in totality which is still pending for
 approval & acceptance (b) The promoters of the company have provided
 letter of support, (c) adequate finances and opportunities would be
 available in the foreseeable future to enable the company to start
 operating on a profitable basis and (d) injection of Rs. 19.50 crores
 as promoters quota which has already been infused by the management
 group. The same has been explained in Note 29.
 
 (ix) Contingent liabilities and Other Commitments
 
 ix.(a) Punjab & Sind Bank has filed a recovery suit before the Debt
 Recovery Tribunal (DRT) for recovery of Rs. 1217.52 lacs against which
 the amount payable to them as per books of accounts is Rs. 803.40 lacs.
 The company contends that the dues of the Bank will be settled as per
 the fresh restructuring scheme and consequently no provision for the
 difference of Rs. 414.12 lacs has been made.
 
 This is subject to approval of fresh restructuring scheme which is
 pending before Hon''ble Delhi High Court and since the Company has not
 made payment of interest & principal in accordance with the concession
 granted by Punjab & Sind Bank, Rs. 1217.52 became payable to Punjab &
 Sind Bank. No provision for the difference of Rs. 414.12 lacs has been
 made by the Company. Besides Interest from 1st April, 2005 to till 31st
 March, 2014, overdue interest, default charges are not provided for.
 The Company has not attempted to determine the financial impact,
 accordingly the net loss for the year is understated and cumulative net
 loss is also understated to that extent.  ix.(b) Induslnd Bank filed a
 recovery suit before the Debt Recovery Tribunal (DRT), of Rs.  1042.42
 lacs against which the amount payable to them as per books is Rs.
 577.00 lacs.  The company contends that the dues of the Bank are to be
 anticipated to be settled as per the fresh restructuring scheme and
 consequently no provision for the difference of Rs.  465.42 lacs has
 been made.
 
 This is subject to approval of fresh restructuring scheme which is
 pending before Hon''ble Delhi High Court and since the Company has not
 made payment of interest & principal in accordance with the concession
 granted by Indusind Bank, Rs. 1042.42 became payable to Indusind Bank.
 No provision for the difference of Rs. 465.42 lacs has been made by the
 Company. Besides Interest from 1 April, 2005 to till 31 March, 2014,
 overdue interest, default charges are not provided for. The Company has
 not attempted to determine the financial impact, accordingly the net
 loss for the year is understated and cumulative net loss is also
 understated to that extent.
 
 ix.(c) During the year ended 30th June, 2009, the Company had received
 Rs. 100.00 lacs from one of the Debtors and reduced the balance
 recoverable from the debtors account.  Subsequently the Hon''ble Punjab
 and Haryana Court deemed that payment to be an out of turn payment and
 asked the company to deposit the amount. The Company had filed a SLP
 with the Hon''ble Supreme Court of India which has been dismissed by
 them. The Company is liable to deposit the amount mentioned above which
 has yet to be deposited.
 
 ix.(d) There is an award passed by the arbitrator against the company
 in the matter of MS Shoes East Limited on May 28,2012 for Rs. 51.28
 lacs i.e. claim amount along with interest of Rs.  307 lacs for an
 underwriting given by the company in the year 1995 for the public issue
 of M/s MS Shoes East Ltd. The same has been contested by Company before
 Hon''ble Delhi High Court.
 
 Qualified Opinion
 
 In our opinion and to the best of our information and according to the
 explanations given to us, except for the effects of the matter
 described in the Basis for 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 Profit and Loss Account, of the loss forthe 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 your attention to The directives issued by the Reserve Bank of
 India and the provisions of section 58A and 58AA of the Companies Act,
 1956, to the extent applicable, on deposits accepted in the earlier
 years and outstanding deposits at the end of the current year have not
 been complied with particularly relating to the register of depositors
 which does not agree with the general ledger, general provisions
 regarding default in repayment of deposits, default in payment of
 interest and maintenance of liquid assets. A notice has also been
 issued by the Reserve Bank of India for the company to show cause why
 penal action should not be taken against the company as prescribed
 under the RBI Act.  Our opinion is not qualified in 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.  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.  except for the matter described in the Basis for Qualified Opinion
 paragraph, 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.  except for the matter described in the Basis for Qualified Opinion
 paragraph, 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.
 
 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 except under sub clause (B) &
 clause (g) of sub section (1) of Section 274 of the said Act.
 
 ANNEXURE TO AUDITOR''S REPORT
 
 (Referred to in paragraph (1) of our report on other legal and
 regulatory requirements of Independent Auditor''s Report of even date)
 
 Annexure referred to in paragraph (1) of the report on other legal and
 regulatory requirements of Independent Auditor''s Report to the members
 of DCM Financial Services Limited on the financial statements for the
 year ended March31,2014
 
 1.  (a) The company is maintaining records showing full particulars,
 including quantitative details and situation offixed assets
 lying/situated at the Head Office and branch office.
 
 (b) The fixed assets (other than the assets given on lease/hire
 purchase) have been physically verified by the management in a phased
 manner so that the entire assets lying at the Head Office and branches
 are covered within a period of three years. There is a program of
 verification of such fixed assets which, in our opinion, is reasonable
 having regard to the size of the company in terms of number & nature of
 assets & manpower available. As explained to us by the management, no
 material discrepancies were noticed on such verification.
 
 (c) Fixed assets worth Rs. 0.26 lacs were disposed off during the year
 ended 31st March, 2014.  The company has not disposed off a substantial
 part of its fixed assets during the year to affect the status of the
 company as a going concern.
 
 2.  (a) According to the information and explanations given to us,
 physical verification of stock of shares and securities was conducted
 by the management at periodic intervals.
 
 (b) In our opinion, the procedures followed by the company for physical
 verification of stock of shares and securities are reasonable and
 adequate in relation to the size of the company and the nature of its
 business, except matter stated at Point No.-14 of this Annexure.
 
 (c) The company is maintaining records of stock of shares and
 securities and there were no discrepancies noticed by them on their
 physical verification, except matter stated at Point No.-14 of this
 Annexure.
 
 3.  In respect of loans, secured or unsecured, granted or taken by the
 company to/ from companies, firms or other parties covered in the
 register maintained under section 301 of the Companies Act, 1956:-
 
 a) To the best of our knowledge and according to the information and
 explanations given to us, the Company has not taken any unsecured loan
 from the Companies, firms or other parties covered in the register
 maintained under Section 301 of the Companies Act, 1956, during the
 financial year ending 31st March-2014.
 
 b) To the best of our knowledge and according to the information and
 explanations given to us, the Company has not granted any unsecured
 loan(s) to any party, firms or Companies covered in the register
 maintained under Section 301 of the Companies Act, 1956, during the
 financial year ending 31-March-2014.
 
 c) Accordingly, the rest of the sub-clauses are not applicable to the
 Company during the reporting period ending 31 -March-14.
 
 4.  In our opinion and according to the information and explanations
 given to us, there are adequate internal control procedures
 commensurate with the size of the company and the nature of its
 business for the purchase of inventories and fixed assets and for the
 sale /realization of services and there was no continuing failure to
 correct major weakness in the internal control system.
 
 5.  lnrespectoftransactionscoveredunderSection301 of the Companies Act,
 1956:-
 
 (a) According to the information and explanations given to us, we are
 of the opinion that there are no transactions which are required to but
 have not been entered in the register maintained under section 301 of
 the Companies Act, 1956.  b) In our opinion and according to the
 information and explanations given to us, there were no transactions
 during the year exceeding the value of rupees five lakhs in respect of
 any party made in pursuance of contracts or arrangements entered in the
 register maintained under section 301 of the Companies Act, 1956.
 
 6.  In our opinion and according to the information and explanations
 given to us, the company has not accepted deposits during the year. The
 directives issued by the Reserve Bank of India and the provisions of
 section 58A and 58AA of the Companies Act, 1956, to the extent
 applicable, on deposits accepted in the earlier years and outstanding
 deposits at the end of the current year have not been complied with
 particularly relating to the register of depositors which does not
 agree with the general ledger, general provisions regarding default in
 repayment of deposits, default in payment of interest and maintenance
 of liquid assets. A notice has also been issued by the Reserve Bank of
 India for the company to show cause why penal action should not be
 taken against the company as prescribed under the RBI Act.
 
 7.  In our opinion, the company has an internal audit system, which is
 commensurate with its size and nature of its business.
 
 8.  As explained to us maintenance of cost records has not been
 prescribed by the Central Government under clause (d) of sub-section
 (1) of section 209 of the Act.
 
 9.  (a) According to the information and explanations given to us and
 on the basis of our examination of the books of accounts, in our
 opinion the company is generally regular in depositing the undisputed
 statutory dues including Provident Fund, Employees State Insurance,
 Income-tax, Sales tax, Wealth tax, Service Tax, Custom Duty, Excise
 Duty cess and any other statutory dues as applicable with the
 appropriate authorities. According to the information and explanations
 given to us, there were no undisputed amounts payable in respect of the
 above dues which were outstanding as at 31 st March, 2014 for a period
 of more than six months from the date of their becoming payable.
 
 (b) As explained by the management, there is a disputed demand of Rs.
 152.12 lakhs and Rs.  141.74 lakhs for the Assessment Year 2009-10 and
 2010-11 respectively for payment of income tax under the Income Tax
 Act, 1961, which is disputed by the company as the brought forward
 losses under the Income Tax Act has not been allowed by the department.
 The rectification application for deletion of above said two demands
 has been filed by the company which is pending before the appropriate
 authorities.
 
 10.  The company has accumulated losses of more than 50% of its net
 worth as at 3T March, 2014 but has not incurred cash losses during the
 preceding financial year as well as during the current year as per the
 statement of profit & loss. However after considering the impact of
 qualifications referred to in the Main Auditor''s Report, there is a
 loss in both the said two financials years.
 
 11.  The company has defaulted in the repayment of dues to the
 debenture holders, financial institution, and banks as explained in
 Note Nos. 4.1 to 4.3 and Note No 4.5 of Notes to Accounts.
 
 12.  As explained to us by the management, the company has not granted
 any loans or advances on the basis of security by way of pledge of
 shares, debentures and other securities.
 
 13.  The company is not a chit fund, nidhi, mutual benefit fund ora
 society. Accordingly, the provisions of clause (xiii) of the Order are
 not applicable.
 
 14.  According to the information and explanations given to us, during
 the period ended 31- March 2014, the company has not entered into any
 transactions of dealing or trading in shares, securities, debentures
 and other investments for which proper records of such transactions are
 required to be maintained. Shares, securities, debentures and other
 investments have been held by the company in its name except in cases
 of bad deliveries where shares held as stock in trade, were not in the
 name of the company. These have been removed from the records during
 the year. The value of quoted securities which are in physical form &
 has not yet been converted into DEMAT Form have been reconciled at
 value of Rs. 1 such securities.
 
 15.  According to the information and explanations given to us, the
 company has not given any guarantees for loans taken by others from
 banks or financial institutions during the year.
 
 16.  According to the information and explanations given to us, no term
 loans were obtained by the company during the year.
 
 17.  According to the information and explanations given to us, no
 short term loans/inter-corporate deposits were raised by the company
 during the year.
 
 18.  During the year, the company has not made any preferential
 allotment of shares to parties and companies covered in the register
 maintained under Section 301 of the Companies Act, 1956.  Accordingly,
 clause 4(xviii) of the order is not applicable.
 
 19.  The company has not issued any debentures during the year.
 
 20.  The company has not raised any money by public issue during the
 year.
 
 21.  During the course of our examination of the books and records of
 the company and according to the information and explanations given to
 us, we have neither come across any instance of material fraud on or by
 the company advised or reported during the year nor have we been
 informed of such cases by the management.
 
                                          For V.Sahai Tripathi &Co.
                                            Chartered Accountants
                                     Firm''s Registration Number: 000262N
 
 Place : New Delhi                              (Manish Mohan)
 Dated :30th May, 2014                              Partner
                                             Membership No. 91607
Source : Dion Global Solutions Limited
Quick Links for dcmfinancial
Explore Moneycontrol
Stocks     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z | Others
Mutual Funds     A | B | C | D | E | F | G | H | I | J | K | L | M | N | O | P | Q | R | S | T | U | V | W | X | Y | Z
Copyright © e-Eighteen.com Ltd. All rights reserved. Reproduction of news articles, photos, videos or any other content in whole or in part in any form or medium without express written permission of moneycontrol.com is prohibited.