Mar 31, 2015
We have audited the accompanying standalone financial statements of DCM
Financial Services Limited ("the Company"), which comprise the Balance
Sheet as at March 31,2015, and the Statement of Profit and Loss and
Cash Flow Statement for the year ended, and a summary of significant
accounting policies and other explanatory information.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated
in section 134(5) of the Companies Act 2013 ("the 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
referred 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 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.
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 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 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 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 qualified audit opinion.
Basis for Qualified Opinion
(i) 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) adequate finances and opportunities would be
available in the foreseeable future to enable the company to start
operating on a profitable basis and
(c) injection of Rs.1,950.00 Lacs as promoters quota which has already
been infused by the management group. The same has been explained in
Note 30.
(ii) No provision of Rs.823.24 Lacs (Rs.14,843.55 Lacs towards
accumulated Interest as at 31st March, 2015) (Previous Year -
Rs14,020.03 Lacs) 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 31st March, 2015 and
cumulative net loss as well as Current / Non-Current Liabilities as at
31st March, 2015 would have been overstated by Rs.823.23Lacs and
Rs.14843.55Lacs 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.g, Note 4.4(g) 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.e 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.5627.29 lacs whereas the same as per
financials books comes to Rs.5617.20 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.(e) & Note 4.4.(f).
(vi) Balance confirmation of bills receivable and payable, advances
recoverable in cash or in kind, receivables and payables relating to
lease and hire purchase, lease security deposit of which party wise
details are not available. Balance confirmation of inter-corporate
deposits, balance of ex-employees, margin against L/C, loans from
institutions, banks, and other receivables and payables have not been
received from the parties/persons concerned. In the absence of balance
confirmation the closing balances as per books of accounts have been
incorporated in the final accounts and have been shown, unless
otherwise stated by the management about its recoverability in the
financials including considering the NPA Provisions, are good for
recovery/ payment. Time barred debts under the Limitations Act have not
been separately ascertained and written off or provided for. In the
absence of such confirmation & corresponding reconciliation, it is not
feasible for us to determine financial impact on the financials. Please
refer Note No-31.
(vii) 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.(h).
(viii) Global IT Options Limited has till 31st March, 2015 incurred
expenditure of Rs.20.47 lacs for & on behalf of its Holding Company
(i.e. DCM Financial Services Limited). It comes under the category of
short term funding. In case of Inter-Corporate Deposit, Section 186 of
Companies Act, 2013 stipulates to charge interest at a rate not less
than the bank declared by Reserve Bank of India. No Interest has not
been provided on outstanding balance of Rs.20.47 lacs by Company to its
subsidiary - Global IT Options Limited. It is non compliance of Section
186 of Companies Act, 2013, which could attract penalties.
(ix) Contingent liabilities and Other Commitments
(a) Claims lodged and contingent liability arising out of suits and
winding up petitions filed against the company not acknowledged as
debts amounts to Rs.826.38 Lacs. There are also other cases filed in
consumer, civil & criminal courts and other courts against the company
for which the company is contingently liable but for which the amount
is not quantifiable.
(b) Punjab & Sind bank has filed a recovery suit before the Debt
Recovery Tribunal (DRT) for recovery of Rs.1,217.52 Lacs against which
the amount payable to them, as per books 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. In the event of default in the payment
of interest and principal or default as per Fresh Restructuring Scheme
or Fresh Restructuring Scheme is rejected, the concessions made by PSB
shall stand withdrawn and their claim settled before the Debt Recovery
Tribunal of Rs.1,217.52 Lacs will become payable with immediate effect.
(c.) IndusInd Bank has filed a recovery suit before the Debt Recovery
Tribunal (DRT), of Rs.1,042.42 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 will be settled as per the fresh restructuring scheme and
consequently no provision for the difference of Rs.465.42 Lacs has
been made. In the event that the company fails to pay the interest or
principal or company default as per Fresh Restructuring Scheme or Fresh
Restructuring Scheme is rejected, the concessions made by IndusInd Bank
will be withdrawn and the amount claimed in the Debt Recovery Tribunal
amounting to Rs.1,042.42 Lacs would be payable with immediate effect.
(d) During the year 1999, the company had received Rs.100.00 Lacs from
one of its debtors i.e. Pure Drinks New Delhi Ltd. and reduced the
same amount from his recoverable balance. Subsequently the Hon'ble
Punjab and Haryana Court deemed that payment is an out of turn payment
and asked the company to deposit back the said amount. The company had
filed a SLP with the Hon'ble Supreme Court of India which has been
dismissed by them. Therefore the company is liable to deposit the
amount mentioned above which has yet to be deposited. And in view of
restrictions imposed on operations of Bank A/c's by Hon'ble Delhi High
Court, the company has filed an application to release this money for
depositing the same with Punjab & Haryana High Court.
(e) During the year ended 30th June, 2011 the company's tenant has
filed a claim of Rs.100.00 Lacs against the company due to damages
suffered by the tenant which is pending under arbitration proceedings
as on 31st March, 2015.
(f) There is a demand of Rs.141.75 Lacs raised by Income Tax Department
for the Assessment Year 2010-11 for payment of income tax under the
Income Tax Act, 1961, which is disputed by the company as brought
forward losses under the Income Tax Act has not been allowed by the
department and rectification application for deletion of above said
demand has been filed by the company which is pending before the
appropriate authorities.
(g) 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.512.80 Lacs
i.e. claim amount along with interest of Rs.307.00 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.
(h) Due to dispute with the builder M/s NBCC Ltd. from which the
company had purchased an office premises in the year 1995, regarding a
claim for Rs.283.00 Lacs on account of increase in super area and
certain other expenditure M/s NBCC Ltd. had incurred and the same is
pending in arbitration.
Qualified Opinion
In our opinion and to the best of our information and according to the
explanations given to us, except for the possible effects of the matter
described in the Basis for Qualified Opinion paragraph, 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 31st March 2015, and its
profit/loss and its cash flows for the year ended on that date
Emphasis of Matter
Till June, 2007, Group Companies funded expenditure or repayments made
by the company worth Rs.549.71 Lacs. The same had 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. Such amounts were
not received by the company under any invitation or subscription to any
issue and the enabling resolutions passed in this regard have expired &
shares cannot be issued as per SEBI Guidelines. Besides, such amount of
share application money is covered under Private Placement Rules
defined under Companies Act, 2013. Companies Act 2013 stipulates that
if a company had received any amount by way of subscriptions to any
shares, stock, bonds or debentures before the 1st April. 2014, such
share application money should either be allotted till 1st June, 2015
or be refunded. During the year ended 31-March-2015, the Company has
transferred such amount of Rs.549.71 Lacs from Share Application to
Long-Term Liabilities & shall seek permission for payment upon sanction
of Fresh Restructuring Scheme by the Hon'ble Delhi High Court.
Our opinion is not modified in the 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) As required by section 143 (3) of the Act, we report that:
a. We have sought and, except for the matters described in the Basis
for Qualified Opinion paragraph, 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 possible effects of the matter described in the
Basis for Qualified Opinion paragraph above, 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 impact of the matter described in the Basis for
Qualified Opinion paragraph above, in our opinion, the Balance Sheet,
Statement of Profit and Loss and Cash Flow Statement comply with the
Accounting Standards specified under section 133 of the Act, read with
Rule 7 of the Companies (Accounts) Rules, 2013;
f. The matter described in the Basis for Qualified Opinion paragraph
above, in our opinion, may have an Qualified effect on the functioning
of the Company.
g. On the basis of written representations received from the directors
as on March 31,2015, and 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.
h. The Qualified remarks relating to the maintenance of accounts and
other matters connected therewith are as stated in the Basis for
Qualified Opinion paragraph above. The qualification relating to the
maintenance of accounts and other matters connected therewith are as
stated in the Basis for Qualified Opinion paragraph above.
i. 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
a. The Company has disclosed the impact of pending litigations on its
financial position in its financial statements - Refer Note 24 to the
financial statement.
b. The Company did not have any long-term contracts including
derivative contracts for which there were any material foreseeable
losses.
c. The company moved an application before the Hon'ble Company Law
Board, New Delhi on 22nd July 2004 under Regulation 44 of the Company
Law Regulations 1991 proposing a fresh repayment schedule to fixed
depositors of the Company. The company filed a fresh Scheme of
Arrangement for the reorganization of the share capital of the company
and for compromise with the secured and unsecured creditors of the
company, hereinafter referred to as the "fresh restructuring scheme"
before the Hon'ble Delhi High Court, New Delhi on 24th September 2004
mentioning therein repayment schedule. All the unpaid matured fixed
deposits of Rs.5617.20 Lacs, Unpaid Matured Debentures of Rs.2552.29
Lacs & Stale cheques in respect of balance of uncashed/unrealized in
respect of Fixed Deposits and Non Convertible Debentures totaling
Rs.14.73 Lacs issued prior to submission of restructuring scheme & as
well as after the scheme which were not encashed by the FD and NCD
Holders standing as at 31st March, 2015. All these matured fixed
deposits, Unpaid Matured Debentures & Stale Cheques are more than seven
year old. Out of Rs.14.73 Lacs of Stale Cheques, Rs.13.74 lacs were
issued prior to submission of said fresh restructuring scheme & rest
has been issued after the issuance of fresh restructuring scheme.
During the year ended 31-March-2015, Rs.14.16 Lacs and Rs.0.57 Lacs has
been transferred from the Stale Cheques Account to Fixed Deposits
Account and Debentures Account respectively. Company represents that
all the said amounts are payable as per the outcome of fresh
restructuring scheme pending before Hon'ble Delhi High Court at New
Delhi and Based on above, there were no amounts which were required to
be transferred to the Investor Education and Protection Fund by the
Company.
ANNEXURE TO INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph (1) of our report on other legal and
regulatory requirements of even date)
Annexure referred to in paragraph (1) of our report on other legal and
regulatory requirements of Independent Auditor's Report to the members
of DCM Financials Services Limited on the financial statements for the
year ended March 31, 2015
i) (a) The company has maintained records showing full particulars
including quantitative details and situation of fixed assets of all its
units.
(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 regards to the size of the Company in terms of number & nature
of assets & manpower available. As explained to us by the management,
no discrepancies were noticed on such verification.
(ii) (a) Inventories of stock of shares and securities have been
physically verified during the year by the management and in our
opinion, the frequency of verification is reasonable.
(b) The procedures for physical verification of inventories of stock of
shares and securities followed by the management 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 proper records of its inventories of
stock of shares and securities. The discrepancies noticed during the
course of physical verification between the physical stocks and the
book records were not material. However the same have been properly
dealt with in the books of account, except matter stated at Point no.
14 of this Annexure.
(iii) The Company has not granted loans to companies, firms or other
parties covered in the register maintained under section 189 of the
Companies Act, 2013,
(iv) 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 fixed assets, purchase & sale of services.
The activities of the Company do not involve purchase or sale of goods.
Further, on the basis of our examination of the books and the records
of the company, and according to the information and explanations given
to us, we have neither come across nor have been informed about any
continuing failure on the part of the management to correct major
weaknesses in the aforesaid internal control procedures.
(v) The company has not accepted deposits from the public during the
year. The directives issued by the Reserve Bank of India and the
provision of section 73 to 76 or any other relevant provision of the
Companies Act 2013, the extent applicable, on deposits accepted in the
earlier years and the outstanding deposits at the end of current year
have not been complied with particularly relating to the register of
depositors which does not agree with general ledger, general provisions
regarding default in repayment of deposits, default in repayment of
interest and maintenance of liquid asset 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.
(vi) As explained to us maintenance of cost records has not prescribed
pursuant to the rules made by the Central Government under Section
148(1) (d) of the Companies Act, 2013
(vii) (a) According to the information and explanations given to us, no
undisputed amounts payable in respect of Provident Fund, Investor
Education and Protection Fund, Employees' State Insurance, Income Tax,
Sales Tax, Wealth Tax, Service Tax, Custom Duty, Excise Duty, Cess and
other undisputed statutory dues were outstanding at the year end, for a
period of more than six months from the date they became payable.
(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 the payment of 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 appropriation authorities
(c) There is no amount which is required to be transferred to investor
education and protection fund in accordance with relevant provisions of
the Companies act, 2013 and rules there- under.
(viii) The accumulated losses at the end of the financial year exceed
its net worth. The company has incurred cash losses in this financial
year as against cash losses in the financial year immediately preceding
the current financial year.
(ix) The company had defaulted in the repayment of dues to financial
institutions, banks and debenture holders as explained in Note Nos. 4.1
to 4.3 and Note No. 4.5 of Notes to Accounts.
The matter is sub-judice with Hon'ble Delhi High Court as the company
had filed a fresh Scheme of Arrangement for the reorganization of the
share capital of the company and for compromise with the secured and
unsecured creditors of the company, hereinafter referred to as the
"fresh scheme" before the Hon'ble Delhi High Court at New Delhi on 24th
September 2004 and the same is pending as at 31st March, 2015.
(x) The company has not given any guarantee for loans taken by others
from bank or financial institutions and therefore rest of the
sub-clause is inapplicable and has not been commented upon.
(xi) According to the information and explanations given to us and on
an overall examination of the books of accounts of the company, we
report that no term loan was taken during the year ended 31st March,
2015. However, the term loans taken by company in earlier years were
applied for the purpose for which such loans obtained.
(xi) According to the information and explanations given to us, no
fraud on or by the company has been noticed or reported during the
course of our audit
For V Sahai Tripathi & Co.
Chartered Accountants
Firm's Registration Number-000262N
Place: New Delhi MANISH MOHAN
Date : 29th May, 2015 Partner
M.N.- 091607
Mar 31, 2014
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
Mar 31, 2012
(1) We have audited the attached balance sheet of DCM Financial
Services Limited as at 31st March, 2012 and also the statement of
profit & loss account and the cash flow statement for the year ended on
that date annexed thereto. These financial statements are the
responsibility of the company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
(2) We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management as well as evaluating the overall presentation of
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
(3) 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, (the Act) and on the basis of such checks of the books and
records of the company as we considered appropriate and according to
the information and explanations given to us during the course of the
audit, we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said order.
(4) These accounts have been prepared using the going concern
assumption based on an assumption & premises made by the management
that the fresh scheme submitted would be approved by the Hon'ble Delhi
High Court, adequate finances and opportunities would be available in
the foreseeable future to enable the company to start operating on a
profitable basis and on a letter of financial support by the promoter
group. These accounts do not include any adjustments that would result
from any possible discontinuance of the existing financial support by
the promoter group.
(5) Further to our comments in the Annexure referred to in paragraph 4
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 as far as appears from our examination of the
books.
(c) The company's balance sheet and statement of profit & loss account
dealt with by this report are in agreement with the books of account.
(d) In our opinion the balance sheet, statement of profit & loss
account and the cash flow statement of the company dealt with by this
report comply with requirements of the accounting standards referred to
in sub-section (3C) of section 211 of the Companies Act, 1956 except
for non-provision of interest and discounting charges on accrual basis
as prescribed by Accounting Standard 1 and non-provision of doubtful
receivables and other current assets as prescribed by Accounting
Standard 28 on Impairment of Assets issued by Ministry of Corporate
Affairs, Government of India. The same has been explained in clause 5
(f) in this report.
(e) Based on the representations made by all the Directors of the
company and the information and explanations duly certified given to us
by the company none of the Directors of the company are disqualified as
on 31st March, 2012 from being appointed as a Director in terms 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.
Due to defaults in repayment of Fixed Deposits listed in section
274(1)(g) of the Companies Act, 1956, the company has become a
disqualifying company and consequently its Directors are disqualified
from being appointed or re-appointed as Directors of any other company.
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said balance sheet and statement of
profit & loss account subject to recognition of rental income of Rs
68.26 Lacs during the financial year ended 31st March, 2012 in view of
uncertainty in realization of such income & non provision of doubtful
debts against rental receivable of Rs 418.29 lacs pertaining to
previous years which have not yet been realized, net profit for the
year & current assets are overstated and cumulative net loss is
understated to that extent, Note 4.1.f, Note 4.1.g.(i), Note 4.2.c &
4.2.d, Note 4.3.2, Note 4.3.3, Note 4.4(f), Note 4.6 on non-provision
of interest of Rs 622.93 lacs payable on debentures, term loans and
banks, fixed deposits, and inter corporate deposits, net profit for the
year & current assets are overstated and cumulative net loss is
understated to that extent , Note 2.2 on non-creation of debenture
redemption reserve due to insufficient profits, Note 24 on application
for acceptance of fresh scheme of arrangement which is pending before
the Hon'ble Delhi High Court for approval & acceptance, Note 4.1.d and
Note 4.2.b & 4.3.1 on security against debentures and banks and
institutions respectively, Note 4.4.(b) on defaults in repayment to
depositors, Note 4.4.(d) & Note 4.4.(e) on un-reconciled differences in
fixed deposit register, Note 4.4.(g) on non-maintenance of statutory
minimum liquid assets, Note 11.2 & Note 12.1 on non-provision of NPA's
of Rs 470.22 Lacs & Rs 653.16 Lacs respectively, net profit for the
year & current assets are overstated and cumulative net loss is
understated to the extent of Rs 1123.38 lacs, Note 11.3 on lack of
reconciliation of stock in trade, Note 28 on assumption by the
management that the company is a going concern, Note 29 (a) on absence
of balance confirmation, Note 29 (b) on un-reconciled balances, Note-30
on payment of Director's remuneration of Rs 8.27 Lacs (which includes
previous years director remuneration of Rs 5.40 lacs) without obtaining
approval of Central Government under Section 309 of the Companies Act,
1956, Note 23 on contingent liabilities not ascertained and Para 6 of
CARO relating to fixed deposits and the remaining notes appearing
thereon, read with the Accounting Policies, give the information
required by the Companies Act, 1956, in the manner so required and give
a true and fair view :-
i) In the case of the balance sheet of the state of affairs of the
company as at 31st March, 2012; and
ii) In the case of the Statement of profit & loss of the company of the
Profit for the year ended 31st March, 2012; and
iii) In the case of the cash flow statement of the cash flows for the
year ended on 31st March, 2012.
ANNEXURE TO THE AUDITORS' REPORT
(Referred to in paragraph (3) of our report of even date)
1. (a) The company is maintaining records showing full particulars,
including quantitative details and situation of fixed assets 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) There was no disposal of fixed assets during the year.
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.
(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 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 Company has kept for
itself a few shares & securities as a security received from its
customer against the recoverable amount of Rs. 164.96 Lacs, which are
under reconciliation & confirmation. This has been explained in Note
No. Ã 11.3 of the financials.
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 31-March-2012.
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-2012.
c) Accordingly, the rest of the sub-clauses are not applicable to the
Company during the reporting period ending 31-March-12.
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. In respect of transactions covered under Section 301 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. 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 31st March, 2012 for a period
of more than six months from the date of their becoming payable.
(b) There is a disputed a demand of Rs152.12 lakhs for payment of
income tax under the Income tax Act, 1961, which is disputed by the
Company and is pending before the appropriate authorities.
10. The company has accumulated losses of more than 50% of its net
worth as at 31st March, 2012 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
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 & 4.4 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 or a
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 31st March 2012, 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 Company has kept for itself a few shares & securities as
a security received from its customer against the recoverable amount of
Rs. 164.96 Lacs, which are under reconciliation & confirmation. This
has been explained in Note No. Ã 11.3 of financials.
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
FRN-00262N
Place : New Delhi (Manish Mohan)
Dated: 31st August-2012 Partner
Membership No: 091607
Jun 30, 2011
(1) We have audited the attached balance sheet of DCM Financial
Services Limited as at 30th June, 2011 and also the profit & loss
account and the cash flow statement for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the company's management. Our responsibility is to express an opinion
on these financial statements based on our audit.
(2) We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management as well as evaluating the overall presentation of
financial statements. We believe that our audit provides a reasonable
basis for our opinion.
(3) 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, (the Act) and on the basis of such checks of the books and
records of the company as we considered appropriate and according to
the information and explanations given to us during the course of the
audit, we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said order.
(4) These accounts have been prepared using the going concern
assumption based on an assumption & premises made by the management
that fresh scheme would be approved by Hon'ble Delhi High Court,
adequate finances and opportunities would be available in the
foreseeable future to enable the company to start operating on a
profitable basis and on the letter of financial support by the promoter
group. These accounts do not include any adjustments that would result
from discontinuance of the existing financial support by the promoter
group.
(5) Further to our comments in the Annexure referred to in paragraph 3
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 as far as appears from our examination of the
books.
(c) The company's balance sheet and profit & loss account dealt with by
this report are in agreement with the books of account.
(d) In our opinion the balance sheet, profit & loss account and the
cash flow statement of the company dealt with by this report comply
with requirements of the accounting standards referred to in
sub-section (3C) of section 211 of the Companies Act, 1956 except for
non-provision of interest and discounting charges on accrual basis as
prescribed by Accounting Standard 1 and non-provision of doubtful
receivables and other current assets as prescribed by Accounting
Standard 28 on Impairment of Assets.
(e) Based on the representations made by all the Directors of the
company and the information and explanations duly certified given to us
by the company none of the Directors of the company are disqualified as
on 30th June, 2011 from being appointed as a Director in terms of
section 274 of the Companies Act, 1956 except sub clause (B) & clause
(g) of sub section (1).
However, due to defaults in repayment of Fixed Deposit listed in
section 274(1)(g) of the Companies Act, 1956, the company has become a
disqualifying company and consequently its directors are disqualified
from being appointed or re-appointed as directors of any other company.
(f)In our opinion and to the best of our information and according to
the explanations given to us, the said balance sheet and profit & loss
account subject to recognition of Rental Income of Rs 105.68 Lacs
during the financial year ended 30th June, 2011 & non provision of
doubtful debts against Rental Receivable of Rs 280.69 lacs pertaining
to previous years which have not yet been realized & are also doubtful
of recovery, net profit for the year & current assets are overstated
and cumulative net loss is understated to that extent, non provision of
doubtful realization on stock in trade of Rs. 1.96 lacs, net profit for
the year & Current Assets are overstated and cumulative net loss is
understated to that extent along-with Notes 5 (c), 5(e) 6(B), (C), (D),
7(e), 8 on non-provision of interest on debentures, term loans and
banks, fixed deposits, and inter corporate deposits, 5(d) on non-
creation of debenture redemption reserve, Note 1 on application for
acceptance of fresh scheme of arrangement which is pending before the
Hon'ble Delhi High Court for approval & acceptance, Note 5(a) and 6(E)
on security against debentures and banks and institutions respectively,
Note 7(a) on defaults in repayment to depositors, Note 7(c) & 7(d) on
un- reconciled differences in fixed deposit register, Note 7(f) on non-
maintenance of statutory minimum liquid assets, Note 9 on non-
provision of NPA's, Note 11 on non-reconciliation of stock in trade,
Note 13 on assumption by the management that the company is a going
concern, Note 14(a) on absence of balance confirmation, Note 14(b) on
un-reconciled balances, Note -15 on payment of Director's Remuneration
of Rs 3.54 Lacs without obtaining approval of Central Government under
Section 309 of the Companies Act, 1956, Note 18 on contingent
liabilities not ascertained and Para 6 of CARO relating to fixed
deposits and the remaining notes appearing thereon read with the
Accounting Policies give the information required by the Companies Act,
1956, in the manner so required and give a true and fair view :-
i) In the case of the balance sheet of the state of affairs of the
company as at 30th June, 2011; and
ii) In the case of the profit & loss account of the company of the
Profit for the year ended 30th June, 2011; and
iii) In the case of the cash flow statement of the cash flows for the
year ended on 30th June, 2011.
ANNEXURE TO THE AUDITORS' REPORT (Referred to in paragraph (3) of our
report of even date)
1. (a) The company is maintaining records showing full particulars,
including quantitative details and situation of fixed assets 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 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) There was no disposal of fixed assets except discharged of the
contractual obligation during the year .
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.
(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 in cases of bad deliveries where shares
held as stock in trade were not in the name of the company. The same
has been removed from records during the year. The Company has kept
with itself few shares & securities as a security received from its
customer against the recoverable amount of Rs. 164.96 Lacs, which are
under reconciliation & confirmation. This has been explained in Note
No. - 11 of Notes to Accounts.
3. The company has not during the year, granted/taken any loans
to/from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act and therefore clause
(iii) is not applicable and hence has not been commented upon.
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. In our opinion and according to the information and explanations
given to us, there were no transactions during the year, which require
to be entered in the register maintained under section 301.
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. Maintenance of cost records has not been prescribed by the Central
Govt. 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 was no undisputed amounts payable in respect of the
above dues which were outstanding as at 30th June, 2011 for a period of
more than six months from the date of their becoming payable.
(b) There is a disputed statutory due that have not been deposited on
account of matters pending before appropriate authorities, a demand of
Rs.152.12 Lakh for payment of income tax under the Income tax Act, 1961,
which is disputed by the Company.
10. The company has accumulated losses of more than 50% of its net
worth as at 30th June, 2011 but has not incurred cash losses during the
preceding financial year as well as during the current year as per
profit & loss account. However after considering qualifications
referred in Main Auditor's Report, there is loss in 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. 5 & 6 of Notes to Accounts.
12. As explained to us by the management of the Company, 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 or a
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 year, the company has not entered into any transactions of dealing
or trading in shares, securities, debentures and other investments for
which proper records of the transactions. 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. The same has been removed
from records during the year. The Company has kept with itself few
shares & securities as a security received from its customer against
the recoverable amount of Rs. 164.96 Lacs, which are under
reconciliation & confirmation. This has been explained in Note No. - 11
of Notes to Accounts.
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 share 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
FRN-00262N
Sd/-
Place : New Delhi (Manish Mohan)
Dated: 05-Dec-2011 Partner
Membership No: 091607
Jun 30, 2010
(1) We have audited the attached balance sheet of DCM Financial
Services Limited as at 30th June, 2010 and also the profit & loss
account and the cash flow statement for the year ended on that date
annexed thereto. These financial statements are the responsibility of
the companys management. Our responsibility is to express an opinion
on these financial statements based on our audit.
(2) We conducted our audit in accordance with auditing standards
generally accepted in India. Those Standards require that we plan and
perform the audit to obtain reasonable assurance about whether the
financial statements are free of material misstatement. An audit
includes examining, on a test basis, evidence supporting the amounts
and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made
by the management as well as evaluating the overall presentation of
financial statements. We believe that our audit provides a reasonable
basis forouropinion.
(3) 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, (the Act) and on the basis of such checks of the books and
records of the company as we considered appropriate and according to
the information and explanations given to us during the course of the
audit, we enclose in the Annexure a statement on the matters specified
in paragraphs 4 and 5 of the said order.
(4) These accounts have been prepared using the going concern
assumption based on the letter of financial support by the promoter
group. These accounts do not include any adjustments that would result
from discontinuance of the existing financial support by the promoter
group.
(5) Further to our comments in the Annexure referred to in paragraph 3
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 the
books.
(c) The companys balance sheet and profit & loss account dealt with by
this report are in agreement with the books of account.
(d) In our opinion the balance sheet, profit & loss account and the
cash flow statement of the company dealt with by this report comply
with requirements of the accounting standards referred to in
sub-section (3C) of section 211 of the Companies Act, 1956 except for
non-provision of interest and discounting charges on accrual basis as
prescribed by Accounting Standard 1 and non- provision of doubtful
receivables and other current assets as prescribed by Accounting
Standard 28 on Impairment of Assets.
(e) Based on the representations made by all the Directors of the
company and the information and explanations duly certified given to us
by the company none of the Directors of the company are disqualified as
on 30th June, 2010 from being appointed as a Director in terms of
section 274 of the Companies Act, 1956 except sub clause(B) & clause(g)
of sub section(1).
However, due to defaults in repayment of Fixed Deposit listed in
section 274(1)(g) of the Companies Act, 1956, the company has become a
disqualifying company and consequently its directors are disqualified
from being appointed or re-appointed as directors of any other company.
(f) In our opinion and to the best of our information and according to
the explanations given to us, the said balance sheet and profit & loss
account subject to recognition of Rental Income of Rs 102.96 Lacs
during the financial year ended 30* June, 2010 & non provision of
doubtful debts against Rental Receivable of Rs 274.28 lacs pertaining
to previous years which have not yet been realized & are also not
certain to realize, net profit for the year & current assets are
overstated and cumulative net loss is understated to that extent, non
provision of doubtful realization on stock in trade ofRs. 6.54 lacs,
net profit for the year & Current Assets are overstated and cumulative
net loss is understated to that extent along-with Notes 5 (c), 5(e)
6(B), (C), (D), 7(e), 8 on non-provision of interest on debentures,
term loans and banks, fixed deposits, and inter corporate deposits,
5(d) on non-creation of debenture redemption reserve, Note 1 on
application for acceptance of fresh scheme of arrangement which is
pending before the Hon ble Delhi High Court for approval & acceptance,
Note 5(a) and 6(E) on security against debentures and banks and
institutions respectively, Note 7(a) on defaults in repayment to
depositors, Note 7(c) & 7(d) on un-reconciled differences in fixed
deposit register, Note 7(f) on non-maintenance of statutory minimum
liquid assets, Note 9 on non-provision ofNPA s, Note 11 on
non-reconciliation of stock in trade, Note 13 on assumption by the
management that the company is a going concern, Note 14(a) on absence
of balance confirmation, Note 14(b) on un-reconciled balances, Note -15
on payment of Directors Remuneration of Rs 1.86 Lacs without obtaining
approval of Central Government under Section 309 of the Companies Act,
1956, Note 18 on contingent liabilities not ascertained and para 6 of
CARO relating to fixed deposits and the remaining notes appearing
thereon read with the Accounting Policies give the information required
by the Companies Act, 1956, in the manner so required and give a true
and fair view :-
i) In the case of the balance sheet of the state of affairs of the
company as at 30" June, 2010; and
ii) In the case of the profit & loss account of the company of the
Profit for the year ended 30th June, 2010; and
iii) In the case of the cash flow statement of the cash flows for the
year ended on 30th June, 2010.
ANNEXURE TO THE AUDITORS REPORT (Referred to in paragraph (3) of our
report of even date)
1. (a) The company is maintaining records showing full particulars,
including quantitative details and situation of fixed assets 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 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.
(b) There was no disposal of fixed assets except discharged of the
contractual obligation during the year.
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.
(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 in cases of bad deliveries where shares
held as stock in trade were not in the name of the company. The
Company have kept with itself few shares & securities as a security
received from its customer against the recoverable amount of Rs. 164.96
Lacs, which are under reconciliation & confirmation. This has been
explained in Note No.- 11 of Notes to Accounts.
3. The company has not during the year, granted/taken any loans
to/from companies, firms or other parties covered in the register
maintained under section 301 of the Companies Act and therefore clause
(iii) is not applicable and hence has not been commented upon.
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 tAe purchase of inventories and fixed assets and for the
sale of services and there was no continuing failure to correct major
weakness in the internal control system.
5. In our opinion and according to the information and explanations
given to us, there were no transactions during the year, which require
to be entered in the register maintained under section 301.
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. Maintenance of cost records has not been prescribed by the Central
Govt, 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 30th June, 2010 for a period of
more than six months from the date of their becoming payable.
(b) As explained to us, there are no disputed statutory dues that have
not been deposited on account of matters pending before appropriate
authorities.
10. The company has accumulated losses of more than 50% of its net
worth as at 30th June, 2010 but has not incurred cash losses during the
preceding financial year as well as during the current year as per
profit & loss account. However after considering qualifications
referred in Main Auditors Report, there is loss in 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. 5 & 6.
12. 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 or a
society. Accordingly, the provisions of clause (xiii) of the Order are
not applicable.
According to the information and explanations given to us, during the
year, the company has not entered into any transactions of dealing or
trading in shares, securities, debentures and other investments for
which proper records of the transactions. 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. The Company have kept with
itself few shares & securities as a security received from its customer
against the recoverable amount of Rs. 164.96 Lacs, which are under
reconciliation & confirmation. This has been explained in A/ofe No.- 11
of Notes to Accounts.
14. 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.
15. According to the information and explanations given to us, no term
loans were obtained by the company during the year.
16. According to the information and explanations given to us, no
short term loans/inter-corporate deposits were raised by the company
during the year.
17. The company has not made any preferential allotment of equity
shares during the year.
18. The company has not issued any debentures during the year.
19. The company has not raised any money by public issue during the
year.
20. 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
FRN:00262N
Place : New Delhi (Mahesh Sahai)
Dated: 07.12.2010 Partner
Membership No: 006730