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Sobha Ltd.

BSE: 532784 Sector: Infrastructure
NSE: SOBHA ISIN Code: INE671H01015
BSE 10:39 | 24 Apr 549.00 -1.30
(-0.24%)
OPEN

545.00

HIGH

553.20

LOW

545.00

NSE 10:34 | 24 Apr 548.45 -1.95
(-0.35%)
OPEN

554.75

HIGH

554.90

LOW

545.20

OPEN 545.00
PREVIOUS CLOSE 550.30
VOLUME 2081
52-Week high 687.00
52-Week low 344.50
P/E 29.98
Mkt Cap.(Rs cr) 5,207
Buy Price 549.00
Buy Qty 10.00
Sell Price 549.20
Sell Qty 27.00
OPEN 545.00
CLOSE 550.30
VOLUME 2081
52-Week high 687.00
52-Week low 344.50
P/E 29.98
Mkt Cap.(Rs cr) 5,207
Buy Price 549.00
Buy Qty 10.00
Sell Price 549.20
Sell Qty 27.00

Sobha Ltd. (SOBHA) - Auditors Report

Company auditors report

To the Members of Sobha Limited

Report on the Standalone Ind AS Financial Statements

We have audited the accompanying standalone Ind AS financial statements of SobhaLimited ("the Company") which comprise the Balance Sheet as at March 31 2017the Statement of Profit and Loss including the statement of Other Comprehensive Incomethe Cash Flow Statement and the Statement of Changes in Equity for the year then endedand a summary 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 the preparation ofthese standalone Ind AS financial statements that give a true and fair view of thefinancial position financial performance including other comprehensive income cash flowsand changes in equity of the Company in accordance with accounting principles generallyaccepted in India including the Indian Accounting Standards (Ind AS) specified undersection 133 of the Act read with Rule 7 of the Companies (Accounts) Rules 2014 and theCompanies (Indian Accounting Standards) Rules_ 2015 as amended. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and the designimplementation and maintenance of adequate internal financial control that were operatingeffectively for ensuring the accuracy and completeness of the accounting records relevantto the preparation and presentation of the Ind AS financial statements that give a trueand 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 standalone Ind AS financialstatements based on our audit. We have taken into account the provisions of the Act theaccounting and auditing standards and matters which are required to be included in theaudit report under the provisions of the Act and the Rules made thereunder. We conductedour audit of the standalone Ind AS financial statements in accordance with the Standardson Auditing issued by the Institute of Chartered Accountants of India as 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 whetherthe financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts anddisclosures in the financial statements. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the standaloneInd AS 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 Ind AS financial statements that give a true and fair viewin order to design audit procedures that are appropriate in the circumstances. An auditalso includes evaluating the appropriateness of accounting policies used and thereasonableness of the accounting estimates made by the Company's Directors as well asevaluating the overall presentation of the standalone Ind AS financial statements. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the standalone Ind AS financial statements.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us the standalone Ind AS financial statements give the information required bythe 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 its profit including other comprehensive income its cash flows andthe changes in equity for the year ended on that date.

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 of India in terms of sub-section (11) of section 143 ofthe Act we give in the Annexure 1 a statement on the matters specified in paragraphs 3and 4 of the Order.

2. As required by section 143 (3) of the Act we report that:

(a) We have sought and obtained all the information and explanations which to the bestof 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 theCompany so far as it appears from our examination of those books;

(c) The Balance Sheet Statement of Profit and Loss including the Statement of OtherComprehensive Income the Cash Flow Statement and Statement of Changes in Equity dealtwith by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financial statements comply withthe Accounting Standards specified under section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014 Companies (Indian Accounting Standards) Rules 2015 asamended;

(e) On the basis of written representations received from the directors as on March 312017 and 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) ofthe Act;

(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 2" to this report;

(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 explanations given to us:

i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone Ind AS financial statements – Refer Note 37 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses;

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 Note 13 to thesestandaloneIndASfinancialstatements as to the holding of Specified Bank Notes (SBNs) onNovember 8 2016 and December 30 2016 as well as dealings in Specified Bank Notes duringthe period from November 8 2016 to December 30 2016. Based on audit procedures andrelying on management representations except for the segregation between SBNs and otherdenominations upon which we are unable to comment on in the absence of necessary detailswe report that the amounts disclosed in the said note is in accordance with the books ofaccount maintained by the Company and produced to us for verification.

Other Matter

We did not audit the financial information as regards Company's share in loss ofpartnership firm (post tax) amounting to Rs 108.97 million for the year ended March 312017. The financial information has been audited by other auditors whose reports have beenfurnished to us and the Company's share in profits of partnership firm investments hasbeen included in the accompanying standalone Ind AS financial statements solely based onthe report of other auditors. Our opinion is not modified in respect of this matter.

Annexure 1 referred to in paragraph 1 under the heading "Report on other legal andregulatory requirements" of our report of even date

Re: Sobha Limited ("the Company")

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

(b) All fixed assets have not been physically verified by the management during theyear but there is a regular programme of verification which in our opinion is reasonablehaving regard to the size of the Company and the nature of its assets. No materialdiscrepancies were noticed on such verification.

(c) According to the information and explanations given by the management the titledeeds of immovable properties included in fixed assets are held in the name of theCompany.

(ii) The management has conducted physical verification of inventory at reasonableintervals during the year and no material discrepancies were noticed on such physicalverification.

(iii) (a) The Company had subscribed to unsecured debentures to one party covered inthe register maintained under Section 189 of the Companies Act 2013. In our opinion andaccording to the information and explanations given to us the terms and conditions of thegrant for such debentures are not prejudicial to the Company's interest.

(b) The unsecured debentures are compulsorily convertible into equity shares on expiryof 19 years from date of issue or on happening of certain events. The Company has soldsuch debentures during the year in accordance with the terms as stipulated in theagreement. The payment of interest is regular as per the agreed terms.

(c) There is no overdue amount of loans granted to companies firms or other partieslisted in the register maintained under Section 189 of the Companies Act 2013 which areoutstanding for more than ninety days.

(iv) In our opinion and according to the information and explanations given to usprovisions of Section 185 and 186 of the Companies Act 2013 in respect of loans todirectors including entities in which they are interested and in respect of loans andadvances given investments made and guarantees and securities given have been compliedwith by the Company.

(v) The Company has not accepted any deposits from the public.

(vi) We have broadly reviewed the books of account maintained by the Company pursuantto the rules made by the Central Government for the maintenance of cost records underSection 148(1) of the Companies Act 2013 related to the construction of buildings/structures and other related activities and are of the opinion that prima facie thespecified accounts and records have been made and maintained. We have not however made adetailed examination of the same.

(vii) (a) The Company is generally regular in depositing with appropriate authoritiesundisputed statutory dues including provident fund employees' state insuranceincome-tax sales-tax service tax duty of custom duty of excise value added tax cessand other material statutory dues applicable to it. (b) According to the information andexplanations given to us no undisputed amounts payable in respect of provident fundemployees' state insurance income-tax service tax sales-tax duty of custom duty ofexcise value added tax cess and other material statutory dues were outstanding at theyear end for a period of more than six months from the date they became payable.

(c) According to the records of the Company the dues outstanding of income-taxsales-tax service tax duty of custom duty of excise value added tax and cess onaccount of any dispute are as follows:

Name of the statute Nature of dues Amount * ( Rs in million) Period to which amount relates Forum where dispute is pending
Andhra Pradesh Sales Tax Act Basis of charge of sales tax 26.92 2002-04 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 30.68 1998-06 Sales Tax Appellate Tribunal
Karnataka Sales Tax Act Basis of charge of sales tax 64.55 2003-05 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 127.27 2007-08 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 25.60 2008-09 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 28.62 2009-10 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 67.71 2010-11 High Court
Karnataka Sales Tax Act Basis of charge of sales tax 43.98 2011-12 High Court
Kerala Sales Tax Act Basis of charge of sales tax 20.97 2012-13 Deputy Commissioner (Appeals)
Kerala Sales Tax Act Basis of charge of sales tax 29.66 2013-14 Deputy Commissioner
(Appeals)
Tamil Nadu Value Added Tax Act Basis of charge of sales tax 78.11 2013-14 The Appellate Deputy Commissioner
Tamil Nadu Value Added Tax Act Basis of charge of sales tax 38.37 2014-15 The Appellate Deputy Commissioner
The Maharashtra Value Added Tax Act Basis of charge of sales tax 5.87 2008-09 Joint Commissioner of Sales
Tax Appeal
The Maharashtra Value Added Tax Act Basis of charge of sales tax 2.91 2009-10 Joint Commissioner of Sales Tax Appeal
The Maharashtra Value Basis of charge of sales tax 6.22 2010-11 Joint Commissioner of Sales Tax Appeal
Added Tax Act
Income Tax Act Differential tax treatment 1.65 1999-01 High Court
Income Tax Act Differential tax treatment 1.89 1999-01 Income Tax Appellate Tribunal
Income Tax Act Disallowances 10.40 2008-09 Commissioner of Income Tax (Appeal)
Income Tax Act Disallowances 4.60 2007-11 Additional Commissioner of
Income Tax
Income Tax Act Disallowances 153.21 2005-07 High Court
Income Tax Act Disallowances 1330.07 2006-14 Commissioner of Income Tax (Appeal)
Finance Act1994 (Service Tax Provisions) Basis of valuation 95.67 2006-08 Central Excise and Service Tax Appellate Tribunal
Finance Act1994 (Service Tax Provisions) Service tax demand 790.44 2006-07 Supreme Court
Finance Act1994 (Service Tax Provisions) Disallowances 4.23 2002-07 Central Excise and Service Tax Appellate Tribunal
Finance Act1994 (Service Tax Provisions) Service tax demand 119.32 2008-11 Central Excise and Service Tax Appellate Tribunal
Finance Act1994 (Service Tax Provisions) Service tax demand 387.07 2006-12 Central Excise and Service Tax Appellate Tribunal
Finance Act1994 (Service Service tax demand 67.72 2012-13 Commissioner of Central Excise and Service Tax (LTU)
Tax Provisions)
Finance Act1994 (Service Tax Provisions) Service tax demand 0.33 2008-11 Commissioner of Central
Excise and Service Tax (Appeals)
Customs Act 1962 Differential tax treatment 1.27 2010-11 Central Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Excise duty demand 6.00 2013-16 Central Excise and Service Tax Appellate Tribunal
The Central Excise Act 1944 Excise duty demand 4.75 2013-15 Commissioner of Central Excise

* Net of Rs 425.33 million paid under protest.

(viii) In our opinion and according to the information and explanations given by themanagement the Company has not defaulted in repayment of dues to a financial institutionbank or debenture holders or government.

(ix) In our opinion and according to the information and explanations given by themanagement the Company has utilized the monies raised by way of debt instruments in thenature of Non-convertible debentures and term loans (representing loans with a repaymentperiod beyond 36 months) for the purposes for which they were raised.

(x) Based upon the audit procedures performed for the purpose of reporting the true andfair view of the financial statements and according to the information and explanationsgiven by the management we report that no fraud by the Company or no fraud on the Companyby the officers and employees of the Company has been noticed or reported during the year.

(xi) According to the information and explanations given by the management themanagerial remuneration has been paid / provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013.

(xii) In our opinion the Company is not a nidhi Company. Therefore the provisions ofclause 3(xii) of the order are not applicable to the Company and hence not commented upon.

(xiii) According to the information and explanations given by the managementtransactions with the related parties are in compliance with Section 177 and 188 ofCompanies Act 2013 where applicable and the details have been disclosed in the notes tothe financial statements as required by the applicable accounting standards.

(xiv) According to the information and explanations given to us and on an overallexamination of the balance sheet the Company has not made any preferential allotment orprivate placement of shares or fully or partly convertible debentures during the yearunder review and hence reporting requirements under clause 3(xiv) are not applicable tothe Company and not commented upon.

(xv) According to the information and explanations given by the management the Companyhas not entered into any non-cash transactions with directors or persons connected withhim as referred to in Section 192 of Companies Act 2013.

(xvi) According to the information and explanations given to us the provisions ofSection 45-IA of the Reserve Bank of India Act 1934 are not applicable to the Company.

Annexure 2 to the Independent Auditor's Report of even date on the standalone Ind ASfinancial statements of Sobha Limited Report on the Internal Financial Controls underClause (i) of Sub-section 3 of Section 143 of the Companies Act 2013 ("theAct")

To the Members of Sobha Limited

We have audited the internal financial controls over financial reporting of SobhaLimited ("the Company") as of March_31_2017 in conjunction with our audit ofthe standalone Ind AS financial statements of the Company for the year ended on that date.

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 the Company's policies the 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") and the Standards on Auditing as specified under Section143(10) of the Companies Act 2013 to the extent applicable to an audit of internalfinancial controls both applicable to an audit of Internal Financial Controls and bothissued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our audit opinion on the internal financial controls system over financialreporting.

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 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 March_ 31_ 2017 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 Institute of CharteredAccountants of India.

For S.R. Batliboi & Associates LLP

Chartered Accountants

ICAI Firm Registration Number: 101049W/E300004

per Adarsh Ranka

Partner

Membership Number: 209567

Place: Bengaluru India

Date: May 16 2017