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Madhucon Projects Ltd.

BSE: 531497 Sector: Infrastructure
NSE: MADHUCON ISIN Code: INE378D01032
BSE 15:48 | 17 Jan 34.75 -0.75
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NSE 15:55 | 17 Jan 34.85 -0.60
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OPEN 35.35
PREVIOUS CLOSE 35.50
VOLUME 44659
52-Week high 65.40
52-Week low 24.90
P/E 11.25
Mkt Cap.(Rs cr) 256
Buy Price 34.90
Buy Qty 279.00
Sell Price 0.00
Sell Qty 0.00
OPEN 35.35
CLOSE 35.50
VOLUME 44659
52-Week high 65.40
52-Week low 24.90
P/E 11.25
Mkt Cap.(Rs cr) 256
Buy Price 34.90
Buy Qty 279.00
Sell Price 0.00
Sell Qty 0.00

Madhucon Projects Ltd. (MADHUCON) - Auditors Report

Company auditors report

To The Members of

Madhucon Projects Limited

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of MadhuconProjects Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2017 and the Statement of Profit and Loss (including Other ComprehensiveIncome) the Cash Flow Statement and the Statement of Changes in Equity for the year thenended and a summary of the significant accounting policies and other explanatoryinformation.

Management's Responsibility for the Standalone Financial Statements

The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flows andchanges in equity of the Company in accordance with the accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) prescribed undersection 133 of the Act.

This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the standalonefinancial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.

Auditors' Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit.

We have taken into account the provisions of the Act the accounting and auditingstandards and matters which are required to be included in the audit report under theprovisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone financial statements. The procedures selected depend onthe auditor's judgment including the assessment of the risks of material misstatement ofthe standalone financial statements whether due to fraud or error. In making those riskassessments the auditor considers internal financial control relevant to the Company'spreparation of the standalone financial statements that give a true and fair view in orderto design audit procedures that are appropriate in the circumstances. An audit alsoincludes evaluating the appropriateness of the accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone financial statements.

We believe that the audit evidence obtained by us and the audit evidence obtained bythe branch auditors and other auditors in terms of their reports referred to in the OtherMatters paragraph belowis sufficient and appropriate to provide a basis for our auditopinion on the standalone financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2017 and its profit total comprehensive income its cash flows and thechanges in equity for the year ended on that date.

Emphasis of Matters

We draw attention to the following matter in the Notes to the accompanying financialstatements for the year ended March 31 2017:

a. Note No. 2.4(i) to the financial statements in relation to the carrying value ofinvestments held in and unsecured loans and advances given by the Company to thesubsidiaries or associates listed in that note which have been incurring losses and insome of these companies net worth was fully or substantially eroded. Taking themanagement's internal assessment and initiatives to be implemented to improve theprofitability in the medium to long run into account the management of the Company is ofthe view that carrying value of the investments and loans and advances are realizable atthe value stated in the books.

As per the books of accounts and according to information and explanations given to usclosing balances against these investments and loans and advances in the abovesubsidiaries as at March 31 2017 are aggregating to Rs.146426.83 lakhs.

b. Note No. 2.4(ii) to the financial statements in relation to Madhucon Mega MallPrivate Limited (MMMPL) a subsidiary of the company incorporated for developing shoppingmall cum multiplex on leased land taken from Andhra Pradesh Housing Board(the Board) (nowknown as Telangana Housing Board) at Kukatpally in Hyderabad. The Board issued letter forrevoking the power of attorney and resumption of land. The Company got a status quo orderfrom Honorable XI ACJ Court CCC Hyderabad and the same is pending. Taking in to accountthe management internal assessment and legal opinion obtained by the management of theCompany it is confident in succeeding the case and carrying values of investments in andloans sanctioned to MMMPL are realizable at the values stated in the books of accounts.

According to the books of accounts and information and explanations given to us theinvestment and balance of loan as at March 31 2017are Rs.3502.00 Lakhs and Rs.134.09Lakhs respectively.

c. Note No. 2.4(iii) to the financial statements indicates that the outstanding loansand advances which were granted to Nama Investments Limited and NNR Infra InvestmentsPrivate Limited in which the company's directors have interest are realizable at thecarrying values in the books of accounts though both these companies have been incurringlosses and accumulated losses exceeded the net worth of these companies for the reasonsstated therein.

According to the books of accounts and information and explanations given to us theclosing balance as at March 31 2017 with respect to Nama Investments Limited and NNRInvestments Limited are Rs.4189.34 Lakhs and Rs.511.59 Lakhs respectively.

Our opinion is not qualified on the above matters.

Other Matters

st st

The Company had prepared separate sets of financial statements for the year ended 31March 2016 and 31 March 2015 in accordance with the Accounting Standards prescribed underSection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 (asamended) which were audited by us. These financial statements have been adjusted for thedifferences in the accounting principles adopted by the Company on transition to Ind ASwhich have also been audited by us. Our opinion is not qualified in respect of thismatter.

Report on Other Legal and Regulatory Requirements

1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure A" a statement on the matters specified in paragraphs 3 and 4 of theOrder.

2. As required by Section 143(3) of the Act we reportthat:

a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.

b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.

c) The standalone financial statements dealt with by this Report are in agreement withthe relevant books of account.

d) In our opinion the aforesaid standalone financial statements comply with the Ind ASprescribed under section 133 of the Act.

e) On the basis of the written representations received from the directors as on March31 2017 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2017 from being appointed as a director in terms of Section 164(2) of theAct.

f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".Our report expresses an unmodified opinion onthe adequacy and operating effectiveness of the Company's internal financial controls overfinancial reporting.

g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements;

ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-termcontracts.

iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.

iv. The Company has provided requisite disclosures in the standalone financialstatements as to holdings and dealings in Specified Bank Notes as defined in theNotification S.O. 3407(E)dated the November 8 2016 of the Ministry of Finance during theperiod from November 8 2016 to December 30 2016. Based on audit procedures performedmanagement representations obtained and taking into consideration the information andexplanations given to us in our opinion these are in accordance with the books ofaccount maintained by the Company.

For Kota & Company

Chartered Accountants

Firm's Registration No.011982S

K.S.R.K.Prasad

Partner

Membership No. 022964

Hyderabad

June03 2017

ANNEXURE "A" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date)

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.

(b) The fixed assets have been physically verified during the year by the Managementduring the year and no material discrepancies were noticed on such verification. In ouropinion the frequency of verification of the fixed assets is reasonable having regard tothe size of the Company and nature of its assets.

(c) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deed / transfer deed provided tous we report that the title deeds comprising all the immovable properties (which areincluded under the head "Property plant and equipment") are held in the name ofthe Company.

(ii) As per the information provided to us inventories were physically verified duringthe year by the Management at reasonable intervals and no material discrepancies werenoticed on physical verification.

(iii) According to the information and explanations given to us the Company hasgranted loans unsecured to companies covered in the Register maintained under Section189 of the Companies Act 2013. In respect of such loans and having regard to the rolloverstipulations for loans to certain parties:

(a) The terms and conditions of the grant of such loans are in our opinion primafacie not prejudicial to the Company's interest.

(b) The schedule of repayment of principal and payment of interest has not beenstipulated and hence we are unable to comment as to whether repayment/receipts of theprincipal amount and the interest are regular.

(c) In the absence of stipulated schedule of repayment of principal and payment ofinterest we are unable to comment as to whether there is any amount which is overdue formore than 90 days and whether reasonable steps have been taken by the Company for recoveryof principal amount and interest.

(iv) In our opinion and according to the information and explanations given to us theCompany has complied with the provision of sections 185 and 186 of the Act to the extentapplicable in respect of loans investments guarantees and security.

(v) According to the information and explanations given to us the Company has notaccepted any deposits within the meaning of Section 73 to Section 76 of the Act and theCompanies (Acceptance of Deposits) Rules 2014 (as amended).

(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records under section148(1) of the Act and are of the opinion that prima facie the prescribed cost recordshave been made and maintained. However we have not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

(vii) According to the information and explanations given to us in respect ofstatutory dues:

(a) There are some delays in depositing undisputed statutory dues including ProvidentFund Employees' State Insurance Income-tax Sales Tax Service Tax Customs Duty ExciseDuty Value Added Tax (VAT) Cess and other statutory dues applicable to it. Undisputedamounts payable in respect thereof which were outstanding for more than six months fromthe date they became payable are as follows:

S. No. Name of the Statute Nature of Dues Period Rs. in Lacs
1 The Income Tax Act 1961 Dividend Distribution 2011-12 to 2016-17 78.79
Tax & Interest on it
2 The Building and other Labour cess 2011-12 343.28
Construction workers welfare
cess Act 1996

 

3 Professional Tax P T PAYABLE 2011-12 to 2016-17 47.92
4 The Employees Provident funds provident fund 2012-13 to 2016-17 175.12
and Miscellaneous provision
act 1952
5 Sales Tax Sale Tax payable 2013-14 to 2016-17 355.83
6 Works Contract Tax Works Contract Tax 2014-15 to 2016-17 2595.82
7 The Finance Act 1994 Service Tax 2014-15 to 2016-17 723.79
8 The Income Tax Act 1961 Tax Deducted at Source 2013-14 to 2016-17 683.64
& Interest on it

(b) Details of dues of Income-tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and Cess which have not been deposited as on March 31 2017 on account ofdisputes are given below:

Name of the Statute Forum where dispute Period to which the Amount involved
is pending amount relates (Rs.in lakhs)
The Income Tax Act 1961 CIT (Appeals) Hyderabad 2009-10 to 2012-13 8701.82
Sales Tax Hon'ble High Court 2001 to 2005 & 2009-10 5795.52
Entry Tax Hon'ble Supreme Court 2006-07 2007-08 629.11
2009-10 & 2010-11

(viii) Based on the examination of books of accounts and related records and accordingto the information and explanations given by the management the company has defaulted inrepayment of dues to financial institutions and banks during the year as follows:

Amount in Rs. Lakhs

Delay in Interest payments:
0 to 30 31 to 60 61 to 90 91 to 180 181 and
Name of the Bank days days days days above days
AXIS BANK 82.70 57.40 53.92 - -
BANK OF INDIA 67.81 32.15 0.00 - 164.71
ICICI BANK 311.16 166.09 156.91 - 461.78
IDBI BANK 818.73 207.78 40.43 - 0.00
KOTAK MAHINDRA BANK LIMITED 250.49 126.20 66.27 371.91 0.00
ORIENTAL BANK OF COMMERCE 269.22 179.89 74.54 - 0.00
STATE BANK OF INDIA 223.23 353.73 104.24 63.17 0.00
Name of the Financial Institution
SREI Equipment Finance Ltd 90.75 95.00 104.21 311.59 72.83

 

Amount in Rs. Lakhs

Delay in Principal re payments:
0 to 30 31 to 60 61 to 90 91 to 180 181 and
Name of the Bank days days days days above days
Bank of India - - - - 1767.95
Name of the Financial Institution
SREI Equipment Finance Ltd 418.36 414.12 404.90 1110.04 181.72

The Company has repaid an amount of Rs.4113.89 lakhs and Rs.1283.04 lakhs on or before31st March2017 pertaining to Interest and Principal respectively.

(ix) The Company has not raised moneys by way of initial public offer or further publicoffer and in our opinion and according to the information and explanations given to usthe term loans were applied for the purposes for which they were obtained.

(x) According to the information and explanations given to us no fraud on or by theCompany by its officers or employees has been noticed or reported during the year.

(xi) As per the information and explanations given to us managerial remunerationprovided are in accordance with approvals mandated by the provisions of section 197 of theAct.

(xii) In our opinion the company is not a chit fund or a nidhi company or mutualbenefit fund / society. Accordingly para 3(xii) of the Order is not applicable.

(xiii) As per the explanations and information given to us transactions with therelated parties are in compliance with sections 177 and 188 of the Act where applicableand the details have been disclosed in the Financial Statements etc. as required by theapplicable accounting standards.

(xiv) According to the information explanations given to the company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year.

(xv) In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transactions with itsdirectors or persons connected with them and hence paragraph 3(xv) of the Order is notapplicable.

(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.

For Kota & Company

Chartered Accountants

Firm's Registration No.011982S

K.S.R.K.Prasad

Partner

Membership No. 022964

Hyderabad

June 3 2017

ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT

(Referred to in paragraph 1(f) under ‘Report on Other Legal and RegulatoryRequirements' of our report of even date)

Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")

We have audited the internal financial controls over financial reporting of MadhuconProjects Limited ("the Company") as of March 31 2017 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Management's Responsibility for Internal Financial Controls

The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reportingissued by the Institute of Chartered Accountants of India. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to respective company's policiesthe safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") issued by the Institute of Chartered Accountants ofIndiaand the Standards on Auditing prescribed under Section 143(10) of the Companies Act2013 to the extent applicable to an audit of internal financial controls. Those Standardsand the Guidance Note require that we comply with ethical requirements and plan andperform the audit to obtain reasonable assurance about whetheradequate internal financialcontrols over financial reporting was established and maintained and if such controlsoperated effectively in all material respects.

Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls Over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2017 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia.

For Kota & Company

Chartered Accountants

Firm's Registration No.011982S

K.S.R.K.Prasad

Partner

Membership No. 022964

Hyderabad

June 3 2017