RELIANCE CAPITAL LIMITED
ANNUAL REPORT 2011-2012
AUDITORS` REPORT
To,
The Members of
Reliance Capital Limited
We have audited the attached balance sheet of Reliance Capital Limited
(`the Company`), as at March 31, 2012, the statement of profit and loss and
the cash flow statement of the Company 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.
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 from material misstatement. An audit also 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 management, as well as
evaluating the overall financial statement presentation. We believe that
our audit provides a reasonable basis for our opinion.
1. As required by the Companies (Auditor`s Report) Order, 2003 (`the
Order`) as amended, issued by the Central Government of India in terms of
sub-section (4A) of Section 227 of the Companies Act, 1956 (`the Act`), we
enclose in the Annexure a statement on the matters specified in paragraphs
4 and 5 of the said order.
2. Without qualifying our report, we draw your attention to Note 29 (III)
(b) of the financial statements, regarding the Scheme of Amalgamation (`the
Scheme`) sanctioned by the Hon`ble High Court of Judicature at Bombay, the
Scheme permits the Company to adjust expenses and/or losses identified by
Board of Directors as exceptional items, which are required to be debited
to the Statement of Profit and Loss by a corresponding withdrawal from
General Reserve, which is considered to override the relevant provisions of
Accounting Standard 5 (AS-5) `Net Profit or Loss for the Period, Prior
Period Items and Changes in Accounting Policies`. Accordingly, the Company
has identified loss on sale of investments during the year of Rs. 149
crore, as in the opinion of the Board, such loss are considered to be of an
exceptional items have been met by corresponding withdrawal from General
Reserve and has credited the said withdrawal to the Statement of Profit and
Loss. Had such losses not been met from General Reserve, the Company would
have reflected a profit before tax of Rs. 472 crore and profit after tax
for the year would have been Rs. 370 crore:
3. Further to our comments in the Annexure referred to in paragraph 1
above, we report that
a) we have obtained all the information and explanations which to the best
of our knowledge and belief were necessary for the purpose of our audit;
b) in our opinion, proper books of account, as required by law, have been
kept by the Company, so far as appears from our examination of the books;
c) the balance sheet, the statement of profit and loss and cash flow
statement dealt with by this report are in agreement with the books of
account;
d) In our opinion, the balance sheet, the statement of profit and loss and
the cash flow statement dealt with by this report comply with the
Accounting Standards referred to in subsection (3C) of Section 211 of the
Companies Act, 1 956; as referred in paragraph (2) above, the Company has
exercised the option available as per court orders which overrides the
relevant provisions of Accounting Standard 5 (AS- 5).
e) on the basis of written representations received from the directors as
on March 31, 2012 and taken on record by the Board of Directors, we report
that none of the directors of the Company are disqualified as at March 31,
2012 from being appointed as a director in terms of clause (g) of
subsection (1) of Section 274 of the Act;
f) in our opinion and to the best of our information and according to
explanations given to us, the said financial statements together with the
notes thereon, 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:
(i) in the case of the balance sheet, of the state of affairs of the
Company as at March 31, 2012;
(ii) in the case of the statement of profit and loss, of the profit of the
Company for the year ended on that date; and
(iii) in the case of the cash flow statement, of the cash flows of the
Company for the year ended on that date.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No.: 101 720W Firm Reg. No.: 101248W
Vijay Napawaliya N Sampath Ganesh
Partner Partner
Membership No.: 109859 Membership No.: 042554
Mumbai Mumbai
Dated: May 19, 2012 Dated: May 19, 2012
Annexure to Auditors` Report
(Referred to in our report of even date) (i) In respect of its fixed
assets:
(a) The Company has maintained proper records showing full particulars
including quantitative details and situation of fixed assets.
(b) The Company has a program of physical verification of its fixed assets
by which all fixed assets are verified in a phased manner over a period of
three years. In accordance with this program, certain fixed assets were
verified during the year and no material discrepancies were noticed on such
verification. In our opinion, this periodicity of physical verification is
reasonable having regard to the size of the Company and the nature of its
assets.
(c) As per information and explanation given to us, during the year, the
Company has not disposed off substantial part of fixed assets that would
affect the going concern.
(ii) The Company is a service company, primarily engaged in lending and
investing activities. Accordingly, it does not hold any physical
inventories. Thus, paragraph 4(ii) of the Order is not applicable to the
Company.
(iii) According to the information and explanations given to us, the
Company has neither granted nor taken any loan secured/unsecured to/from
companies, firms or other parties covered in the register maintained under
section 301 of the Companies Act, 1 956. Accordingly, provisions of clauses
(iii)(a) to (iii)(g) of paragraph 4 of the Order are not applicable to the
Company.
(iv) In our opinion and according to the information and explanations given
to us there is an adequate internal control system commensurate with the
size of the Company and the nature of its business with regard to purchase
of fixed assets and sale of services. In our opinion and according to the
information and explanations given to us, there is no continuing failure to
correct major weaknesses in internal control system.
(v) According to the information and explanations given to us, there are no
contracts or arrangements referred to in section 301 of the Companies Act,
1956 that need to be entered in the register required to be maintained
under that section. Accordingly, clause (v) of the Order is not applicable
to the Company.
(vi) The Company has not accepted deposits from public hence directives
issued by the Reserve Bank of India and the provisions of Section 58A and
58 AA or any other relevant provisions of the Act, and rules framed there
under are not applicable for the year under audit.
(vii) In our opinion, the Company has an internal audit system commensurate
with its size and nature of its business.
(viii) According to the information and explanations given to us, The
Central Government has not prescribed maintenance of cost records under
Section 209(1) (d) of the Act, in respect of activities carried on by the
Company. Hence the provisions of clause 4(viii) of the Order is not
applicable to the Company.
(ix) (a) According to the records of the Company, the Company has been
generally regular in depositing with appropriate authorities undisputed
statutory dues including Investor Education Protection Fund, Income tax,
Sales-tax, Wealth tax, Service Tax, Custom Duty, Excise Duty and other
material statutory dues, as applicable, except in case of Professional Tax
in which there were a few delays in payment of the said dues. According to
the information and explanations given to us, there are no undisputed
amounts payable outstanding as at March 31, 2012 for a period of more than
six months from the date they became payable
(b) According to the information and explanation given to us, there are no
such statutory dues, which have not been deposited on account of any
dispute, except in respect of sales tax under Gujarat Sales Tax Act, 1 969
of Rs. 4,75,916 for the period 2001 -02 which is pending before the Gujarat
Sales Tax Tribunal, Ahmedabad and sales tax under Madhya Pradesh General
Sales Tax Act, 1 958 of Rs. 4,30,472 for the period 1996-97 which is
pending before Appellate Deputy Commissioner of the Commercial Tax, Indore
Division - I .
(x) The Company neither has accumulated losses nor has it incurred any cash
losses during the current financial year and in the immediately preceding
financial year.
(xi) Based on our audit procedures and the information and explanation
given by management, we are of the opinion that as at the balance sheet
date the Company has not defaulted in repayment of dues to a financial
institutions, banks or debenture holders.
(xii) In our opinion and according to the information and explanations
given to us, adequate documents and records have been maintained by the
Company in respect of loans and advances granted on the basis of security
by way of pledge of shares, debentures and other securities.
(xiii) In our opinion, the Company is not a chit fund, a nidhi or a mutual
benefit society/society. Therefore, the provisions of clause 4(xiii) of the
Order is not applicable to the Company.
(xiv) The Company has maintained proper records of transactions and
contracts in respect of trading in shares, securities, debentures, and
other investments and timely entries have been made therein. All shares,
securities, debentures and other investments have been held by the Company
in its own name.
(xv) The Company has given guarantees for loans taken by others from banks
or financial institutions. According to the information and explanations
given by the management, in our opinion the terms and conditions of the
guarantees given by the Company for loans taken by others from banks or
financial institutions are not prejudicial to the interest of the Company.
(xvi) According to the information and explanation given to us, the term
loans taken by the Company during the year have been applied for the
purpose for which they were raised.
(xvii) According to information and explanation given to us and on an
overall examination of the Balance Sheet of the Company as at March 31,
2012, no funds raised on short-term basis have been used for long-term
investment.
(xviii) The Company has not made any preferential allotment of shares
during the year to parties and Companies, covered in the register
maintained under Section 301 of the Act.
(xix) The Company has created securities / is in the process of creation of
securities and /or charges in respect of secured debentures issued during
the year.
(xx) The Company has not raised any money by way of public issue during the
year.
(xxi) During the course of our examination of the books and records of the
Company, carried out in accordance with the generally accepted auditing
practices in India, and according to the information and explanations given
to us, we have neither come across any instance of fraud on or by the
Company, noticed or reported during the year, nor have we been informed of
such case by the Management.
For Chaturvedi & Shah For B S R & Co.
Chartered Accountants Chartered Accountants
Firm Reg. No.: 101 720W Firm Reg. No.: 101248W
Vijay Napawaliya N Sampath Ganesh
Partner Partner
Membership No.: 109859 Membership No.: 042554
Mumbai Mumbai
Dated: May 19, 2012 Dated: May 19, 2012 |