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Madhucon Projects Ltd.

BSE: 531497 Sector: Infrastructure
NSE: MADHUCON ISIN Code: INE378D01032
BSE LIVE 15:43 | 20 Sep 29.70 -1.40
(-4.50%)
OPEN

31.00

HIGH

31.00

LOW

29.35

NSE 15:42 | 20 Sep 29.65 -1.35
(-4.35%)
OPEN

31.05

HIGH

31.40

LOW

29.35

OPEN 31.00
PREVIOUS CLOSE 31.10
VOLUME 47378
52-Week high 65.40
52-Week low 24.90
P/E 7.63
Mkt Cap.(Rs cr) 219
Buy Price 0.00
Buy Qty 0.00
Sell Price 29.70
Sell Qty 625.00
OPEN 31.00
CLOSE 31.10
VOLUME 47378
52-Week high 65.40
52-Week low 24.90
P/E 7.63
Mkt Cap.(Rs cr) 219
Buy Price 0.00
Buy Qty 0.00
Sell Price 29.70
Sell Qty 625.00

Madhucon Projects Ltd. (MADHUCON) - Auditors Report

Company auditors report

TO THE MEMBERS OF MADHUCON PROJECTS LIMITED Report on the Financial Statements

We have audited the accompanying financial statements of MADHUCON PROJECTS LIMITED("the Company") which comprise the Balance Sheet as at March 31 2016 theStatement of Profit and Loss the Cash Flow Statement for the year then ended and asummary of significant accounting policies and other explanatory information.

Management’s Responsibility for the 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 thepreparation andpresentation of these financial statements that give a true and fair view of the financialposition financial performance and cash flows of the Company in accordance with theaccounting principles generally accepted in India including the Accounting Standardsspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014 (as amended). This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on ouraudit.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 there under. We conducted our audit in accordancewith the Standards on Auditing specified under Section 143(10) of the Act. Those Standardsrequire that we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether the financial statements are free from materialmisstatements. An audit involves performing procedures to obtain audit evidence about theamounts and disclosures in the financial statements. The procedures selected depend on theauditor’s judgment including the assessment of the risks of material misstatement ofthe financial statements whether due to fraud or error. In making those risk assessmentsthe auditor considers internal financial control relevant to the Company’spreparation of the financial statements that give a true and fair view in order to designaudit procedures that are appropriate in the circumstances. An audit also includesevaluating the appropriateness of accounting policies used and the reasonableness of theaccounting estimates made by the Company’s directors as well as evaluating theoverall presentation of the financial statements. We believe that the audit evidence wehave obtained is sufficient and appropriate to provide a basis for our audit opinion onthe financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid financial statements give the information required by the Actin the manner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of the affairs of the Company as at31st March 2016 its profit and its cash flows 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 2016:

a. Note No. 2.12(iii) 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 due to non completion of the projectwithin the time. The Company got a status quo order from Honorable XI ACJ Court CCCHyderabad and the same is pending. Taking in to account the management internal assessmentand legal opinion obtained by the management of the Company it is confident in succeedingthe case and carrying values of investments in and loans sanctioned to MMMPL arerealizable at the values stated in the books of accounts. According to the books ofaccounts and information and explanations given to us the closing balance as at March 312016 is Rs.3633.80 Lakhs.

b. Note No. 2.12(iv) 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 significant influence and arerealizable at the carrying values in the books of accounts though both these companieshave been incurring losses and accumulated losses exceeded the net worth of thesecompanies for the reasons stated therein.

According to the books of accounts and information and explanations given to us theclosing balance as at March 31 2016 with respect to Nama Investments Limited and NNRInvestments Limited are Rs.3886.45 Lakhs and Rs.473.34 Lakhs respectively.

c. Note No. 2.12(vii) 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 informationand explanations given to us the Company has granted interest free loans and advancesduring the year to these companies is Rs.24039.95 lakhs and closing balances against theseloans and advances as at March 31 2016 are aggregating to Rs.72854.13 lakhs.

Report on Other Legal and Regulatory Requirements

1. As required by the companies (Auditor’s Report) Order 2016 ("theOrder") issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the Annexure- A a statement on the matters specifiedin the paragraph 3 and 4 of the Order. 2. As required by the section 143(3) of the Act wereport that:

(a) we have sought and obtained all the information and explanations which to the bestour 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 balance sheet the statement of profit and loss and the cash flow statementdealt with by this report are in agreement with the books of account;

(d) in our opinion the aforesaid financial statements comply with the AccountingStandards specified under section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014(as amended);

(e) on the basis of the written representations received from the directors as on 31stMarch 2016 taken on record by the Board of Directors none of the Directors isdisqualified as on 31st March 2016 from being appointed as a Director in terms of section164(2) of the Act;

(f) with respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectives of such controls refer to ourseparate report in ‘Annexure-B’; and

(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 in our opinionand to the best of our information and according to the explanation given to us:

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

ii. the Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts; and

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

Fund by the Company

For Kota & Company

Chartered Accountants

Firm’s Registration Number: 011982S

K. S. R. K. Prasad

Partner

Membership Number: 022964

Place: Hyderabad

Date : 30.05.2016

ANNEXURE-A TO THE INDEPENDENT AUDITORS’ REPORT

Referred to in our Audit Report to the members of the Company on the financialstatements for the year ended 31st March 2016 we report that:

TO THE MEMBERS OF MADHUCON PROJECTS LIMITED

(i) (a) The Company has maintained proper records showing full particulars includingquantitative details of Fixed Assets.

(b) All the assets have been physically verified by the management during the yearwhich in our opinion is reasonable having regard to the size of the Company and the natureof its assets. No material discrepancies were noticed on such verification.

(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.

(ii) The physical verification of inventory has been conducted at reasonable intervalsby the management.The Company is maintaining proper records of inventory and anydiscrepancies noticed on physical verification are being properly dealt in the books ofaccounts.

(iii) According to information and explanations given to us the Company has grantedloans to 10parties covered in the register maintained under section 189 of the Act. Out ofwhich 8 parties have been granted interest free loans.

(a) (b) & (c) Since the repayment schedule for such loans is not stipulated weare unable to comment on the regularity of receipt of principal and interest as well asthe adequacy of steps taken to recover the amount.

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

(iv) According to the information and explanations given to us the Company has notaccepted deposits from the public and therefore the provisions of Sections 73 to 76 orany other relevant provisions of the Act and Rules there under are not applicable to theCompany.

(v) We have broadly reviewed the books of account maintained by the Company pursuant tothe Rules made by the Central Government for the maintenance of cost records undersub-section (1) of Section 148 of the Act in respect of Company’s products andservices and are of the opinion that prima facie the prescribed accounts and recordshave been made and maintained. We have however not made a detailed examination of thecost records with a view to determine whether they are accurate or complete.

(vi) a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company undisputed statutory dues includingProvident Fund Sales tax Service tax duty of customs duty of excise value added taxcess and all other statutory dues have been generally regularly deposited with theappropriate authorities except the following:

Name of the Statute Nature of Dues Period Rs. in Lacs
The Income Tax Act 1961 Dividend Distribution Tax & Interest there on 2011-12 to 2015-16 78.12
The Building and other Construction workers welfare Cess Act 1996 LabourCess 2011-12 343.28
Professional Tax P T Payable 2011-12 to 2015-16 41.88
The Employees Provident funds and Miscellaneous provision act 1952 Provident Fund 2012-13 to 2015-16 164.34
Sales Tax Sale Tax payable 2013-14 to 2015-16 190.47
Works Contract Tax Works Contract Tax 2014-15 to 2015-16 293.98
The Income Tax Act 1961 Tax Deducted at Source & Interest there on 2015-16 418.91

(b) According to the information and explanations given to us there are no dues ofIncome tax Wealth tax Sales tax duty of customs duty of excise which have not beendeposited on account of any dispute except the following:

Nature of Duty Dispute pending before Period Rs. In Lacs
Income Tax CIT (Appeals) Hyderabad 2009-10to 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 2009-10 & 2010-11 629.11

(vii) 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:

Delay in Interest payments: Amount in Rs. Lakhs
Name of the Bank 0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days 181 and above days
Axis Bank 128.48 77.71 26.03 0 0
Bank of India 125.42 96.13 98.40 29.32 0
ICICI Bank 1389.51 567.80 435.03 0 0
IDBI Bank 672.52 0 0 0 0
ING Vysya Bank 222.11 202.95 180.00 181.05 0
Oriental Bank of Commerce 263.49 163.76 110.26 59.07 0
Standard Chartered Bank 26.67 0 0 0 0
State Bank of India 326.11 328.57 217.97 0 0
United Bank of India 2.87 5.44 0 4.35 193.52
Name of the Financial Institution
Magma Fincorp Limited 0 0.29 0.05 3.72 14.08
SREI Equipment Finance Ltd. 222.98 150.08 168.38 443.10 33.23
Delay in Principal repayments: Amount in Rs. Lakhs
Name of the Bank 0 to 30 days 31 to 60 days 61 to 90 days 91 to 180 days 181 and above days
ICICI Bank 526.74 533.77 1439.49 0 0
Name of the Financial Institution
Magma Fincorp Limited 0 9.65 0 0 19.59
SREI Equipment Finance Ltd. 278.64 359.04 357.35 1067.63 91.70

The Company has repaid all the above dues on or before 31st March 2016 except for anamount of Rs.846.34 lakhs and 853.16 Lakhs pertaining to Interest and principalrespectively.

(viii) During the year no monies were raised by way of public offer or further publicoffer and as per information and explanations given to us term loans were applied for thepurpose for which they were obtained.

(ix) 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.

(x) 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.

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

(xii) 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. (xiii) According to the information explanations given tothe company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year.

(xiv) According to the information and explanations given to us and based on ourexamination of the records of the Company the Company has not entered into any non cashtransactions with directors or persons connected with him during the year. Accordinglyparagraph 3(xv) of the Order is not applicable.

(xv) The Company is not required to be registered under 45-IA of the Reserve Bank ofIndia Act 1934.

For Kota & Company

Chartered Accountants

Firm’s Registration Number: 011982S

K. S. R. K. Prasad

Partner

Membership Number: 022964

Place: Hyderabad

Date :30.05.2016

ANNEXURE-B TO THE INDEPENDENT AUDITORS’ REPORT

Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 (‘the Act’)

We have audited the internal financial controls over financial reporting of MadhuconProjects Limited (‘the Company’) as of 31st March 2016 in conjunction with ouraudit of the standalone financial statements of the Company for the year ended on thatdate.

Managements’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 (‘the ICAI’). Theseresponsibilities include the design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the orderly and efficientconduct of its business including adherence to the Company’s policies thesafeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation of reliablefinancial information as required under the Act.

Auditors’ 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’) and the Standards on Auditing issued by the ICAI anddeemed to be prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the ICAI. Those Standards and Guidance Note require that wecomply with ethical requirements and plan and perform the audit to be obtain reasonableassurance about whether adequate internal financial controls over financial reporting weestablished and maintained and if such controls operated effectively in all materialrespects. Our audit involves performing procedure to obtain audit evidence about theadequacy of the internal financial controls system over financial reporting and theiroperating effectiveness. Our audit of internal financial controls over financial reportingincluded obtaining an understanding of internal financial controls over financialreporting assessing the risk that a material weakness exists and testing and evaluatingthe design and operating effectiveness of internal control based on the assessed risk. Theprocedures selected depend on the auditors’ judgment including the assessment of therisk of material 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 controlssystem over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company’s internal financial control over financial reporting is a processdesigned to provide reasonable assurance regarding the reliability of financial reportingand the preparation of financial statements for external purposes in accordance withgenerally accepted accounting principles. A company’s internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and disposition of the assets of the Company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of financialstatements in accordance with authorizations of the Management and directors of theCompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorized acquisition use or disposition of the Company’s assets that could havematerial effect on the financial statements.

Inherent Limitations of Internal Financial Controls Over Financial Reporting

Because of the inherent limitations of the 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 procedure may deteriorate.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at 31st March 2016 based on theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting issued by the ICAI.

For Kota & Company

Chartered Accountants

Firm’s Registration Number: 011982S

K.S.R.K.Prasad

Partner

Membership Number: 022964

Place: Hyderabad

Date : 30.05.2016