1. We have audited the accompanying financial statements of THE
LAKSHMI VILAS BANK LTD, KARUR as at 31st March, 2014, which comprise
the Balance Sheet as at March 31, 2014, and the Statement of Profit and
Loss and the Cash Flow Statement for the year then ended and a summary
of significant Accounting Policies and other explanatory information.
Incorporated in these financial statements are the returns of 17
Branches, 8 Regional Offices and other support service units audited by
us as well as the remaining 344 Branches and 6 Service Branches audited
by other branch auditors. The branches audited by us and those audited
by other auditors have been selected by Bank in accordance with the
guidelines issued by the Reserve Bank of India.
Management''s Responsibility for the Financial Statements
2. Management of the Bank is responsible for the preparation of these
financial statements that give true and fair view of the financial
position and financial performance of the Bank in accordance with
Banking Regulation Act, 1949 and complying with Reserve Bank of India
Guidelines issued from time to time. This responsibility includes the
design, implementation and maintenance of internal control relevant to
the preparation and presentation of the financial statements that are
free from material misstatement, whether due to fraud or error.
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We conducted our audit in accordance
with the Standards on Auditing issued by the Institute of Chartered
Accountants of India. Those Standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence
about the amounts and 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
Bank''s preparation and fair presentation of the financial statements in
order to design audit procedures that are appropriate in the
circumstances. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by management, as well as evaluating the overall
presentation of the financial statements.
5. The financial information as at and for the year ended 31st March
2014 of 344 Branches and 6 Service Branches have been audited by other
auditors whose reports have been furnished to us and our opinion is
based solely on the reports of such other auditors.
6. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
7. Without qualifying our opinion, we draw attention to
(a) Note No. 3.10 of the Schedule 18 to the financial statements,
regarding deferment of pension liability and gratuity liability of the
Bank, pursuant to the exemption granted by the Reserve Bank of India to
the Lakshmi Vilas Bank from application of the provisions of Accounting
Standard (AS) 15, Employees Benefits vide circular no.
DBOD.BP.BC/80/21.04.018/2010-11, dated 09-02-2011 on Re-opening of
Pension Option to the employees and Enhancement in Gratuity Limits-
Prudential Regulatory Treatment. Accordingly, out of the unamortized
amount of Rs. 37.24 crore as on 01/04/20l3, the Bank has amortized Rs.
15.56 crore for Pension and Rs. 3.06 crore for Gratuity being
proportionate amount for the year ended March 31, 2014 and balance
amount to be amortized in future periods for Pension is Rs. 15.56 crore
and for Gratuity is Rs. 3.06 crore.
(b) Note No. 3.10 of the Schedule 18 to the financial statements, which
states that, pending receipt of opinion from the Expert Advisory
Committee of the Institute of Chartered Accountants of India, the
provision for pension liability as on 31st March 2014 has been made
based on the actuarial valuation.
(c) Note No. 7 of the Schedule 18 to the financial statements, which
describes creation of Deferred Tax Liability (DTL) on Special Reserve
under section 36 (1) (viii) of the Income Tax Act, 1961 pursuant to
RBI''s Circular No. DBOD. No. BP.BC. 77 / 21.04.018 / 2013-14 dated
December 20, 2013, whereby the DTL of f 7.87 crore pertaining to
periods upto March 31, 2013 has been adjusted to the general reserve of
the Bank and DTL of f 3.11 crore on the Special reserve created during
the financial year ended March 31, 2014 has been charged to the profit
and loss account in accordance with the accounting treatment prescribed
by the Reserve Bank of India.
8. In our opinion and to the best of our information and according to
the explanations given to us, the said accounts together with the notes
thereon give the information required by the Banking Regulation Act,
1949 as well as the Companies Act, 1956 in the manner so required for
the banking companies and give a true and fair view in conformity with
the accounting principles generally accepted in India:
i. in the case of the Balance Sheet, of the state of affairs of the
Bank as at 31st March, 2014;
ii. in the case of the Profit and Loss Account, of the profit for the
year ended on that date; and
iii. in the case of the Cash Flow Statement, of cash flows for the
year ended on that date.
Report on Other Legal and Regulatory Matters
9. The Balance Sheet and the Profit and Loss Account have been drawn
up in accordance with the provisions of Section 29 of the Banking
Regulation Act, 1949 read with Section 211 of the Companies Act, 1956.
10. Subject to the limitations of the audit indicated in paragraphs 1
to 6 above and as required by the Banking Companies (Acquisition &
Transfer of Undertakings) Act, 1970 and subject also to the limitations
of disclosure required therein, 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 and have found them to be satisfactory.
(b) The transactions of the Bank, which have come to our notice, have
been within the powers of the Bank.
(c) The returns received from the Offices and Branches of the Bank, as
supplemented with the information furnished by the Management, have
been found adequate for the purposes of our audit.
11. In our opinion, the Balance Sheet, Profit and Loss Account and
Cash Flow Statement comply with the applicable Accounting Standards
referred to in sub-section (3C) of Section 211 of the Companies Act,
12. We further report that:
i. The Balance Sheet and Profit and Loss Account dealt with by this
report, are in agreement with the books of account and the returns.
ii. In our opinion, proper books of account as required by law have
been kept by the Bank so far as appears from our examination of those
iii. The reports on the accounts of the branches have been dealt with
in preparing our report in the manner considered necessary by us.
iv. As per information and explanation given to us, the Central
Government has, till date, not prescribed any cess payable under
section 441A of the Companies Act, 1956,
v. On the basis of the written representation received from the
directors and taken on record by the Board of Directors, none of the
directors is disqualified as on 31st March 2014 from being appointed as
a director in terms of clause (g) of sub-section (1) of section 274 of
the Companies Act, 1956.
For SAGAR & ASSOCIATES
FR No. 003510S
(V. VIDYASAGAR BABU)
Place : Bangalore Partner
Date : 14th May 2014 Membership No. 027357