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Unitech Ltd.

BSE: 507878 Sector: Infrastructure
NSE: UNITECH ISIN Code: INE694A01020
BSE 15:59 | 17 Jan 9.41 0.85
(9.93%)
OPEN

8.50

HIGH

9.41

LOW

8.00

NSE 15:56 | 17 Jan 9.40 0.85
(9.94%)
OPEN

8.50

HIGH

9.40

LOW

7.95

OPEN 8.50
PREVIOUS CLOSE 8.56
VOLUME 19218933
52-Week high 12.24
52-Week low 4.42
P/E
Mkt Cap.(Rs cr) 2,462
Buy Price 9.41
Buy Qty 1344182.00
Sell Price 0.00
Sell Qty 0.00
OPEN 8.50
CLOSE 8.56
VOLUME 19218933
52-Week high 12.24
52-Week low 4.42
P/E
Mkt Cap.(Rs cr) 2,462
Buy Price 9.41
Buy Qty 1344182.00
Sell Price 0.00
Sell Qty 0.00

Unitech Ltd. (UNITECH) - Auditors Report

Company auditors report

TO THE MEMBERS OF UNITECH LIMITED

REPORT ON THE STANDALONE INDIAN ACCOUNTING STANDARDS (IND AS) FINANCIAL STATEMENTS

We have audited the accompanying standalone Ind AS financial statements of UnitechLimited (“the Company”) which comprise the Balance Sheet As at March 312017 the Statement of and Loss (including Other Comprehensive Income) the Cash FlowStatement and the Statement of Changes in Equity for the year then ended and a summary ofsignificant accounting policies and other explanatory information in which areincorporated the Returns for the year ended on that date to be audited by the branchauditor of the Company's branch office at Libya.

MANAGEMENT'S RESPONSIBILITY FOR THE STANDALONE IND AS 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 positionfinancial performance (including other income) cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards prescribed under Section 133 of the Act. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone Ind AS financialstatements fair view and are free from material misstatement whether due to fraud orerror.

AUDITOR'S RESPONSIBILITY

Our responsibility is to express an opinion on these standalone

. IndASfinancial statements based on our audit

We have taken into account the provisions of the Act and the Rules made thereunderincluding the accounting and auditing standards and matters which are required to beincluded in the audit report under the provisions of the Act and the Rules madethereunder.

We conducted our audit of the standalone Ind AS financial statements in accordance withthe 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 standalone Ind AS financial statements are freefrom material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the standalone Ind

AS financial statements. The procedures selected depend on the auditor's judgmentincluding the assessment of the risks of material misstatement of the standalone Ind ASfinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thestandalone Ind

AS financial statements that give a true and fair view in order to design auditprocedures that are appropriate in the circumstances.

An audit also includes evaluating the appropriateness of the accounting policies usedand the reasonableness of the accounting estimates made by the Company's Directors aswell as evaluating the overall presentation of the standalone Ind AS financial statements.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the standalone Ind AS financial statements.

BASIS FOR QUALIFIED OPINION

1. We draw your attention to Note no. 12 to the standalone Ind

AS financial statements “Trade Receivables” wherein an of thefinancial amountof `11961456172 is outstanding As at 31st March comprehensive 2017(Previous year ended 31st March 2016 `11343059293) which is comprised of tradereceivables pertaining to sale of land properties trading goods finished goodscommercial plots/properties of various kinds. Some of these balances amounting to `2279863145As at 31st March 2017 (Previous year ended 31st March 2016 `2257811164) areoutstanding for significantly long periods of time. The management has explained that suchlong overdue outstandings have arisen in the normal course of business from transactionswith customers who have contravened the contractual terms. The management has undertaken adetailed exercise to evaluate the reasons of such long outstandings as well as possibilityof recoveries. The management based on internal thatgive assessmentstrueand andevaluations possible recoveries from securities (registered or unregistered) haverepresented that significant portion of such trade receivables outstandings are stillrecoverable/adjustable and that no accrual for diminution in value of trade receivables istherefore necessary As at 31st March 2017. However we are unable to ascertain whether allof the long overdue outstanding trade receivables are fully recoverable/ adjustable sincethe outstanding balances As at 31st March 2017 are outstanding/remained unadjusted for along period of time. Based on our assessment and audit procedures performed in ouropinion trade receivables amounting to `2279863145 are doubtful of recovery andconsequently management ought to provide/accrue for the diminution for these balances.Had the management provided/accrued for the diminution in value of the said tradereceivables the carrying value of the trade receivables would have been lower by `2279863145and the loss for the year ended 31st March 2017 would have been higher by `2279863145.

2. We draw your attention to Note no. 27 to the standalone Ind AS financialstatements with respect to deposits from public. The Company has failed to repay depositsaccepted by it including interest thereon in respect of the following deposits:

Particulars PRINCIPAL OUTSTANDING AS AT MARCH 31 2016 (`) PRINCIPAL PAID DURING THE FINANCIAL YEAR (`) UNPAID MATURED DEPOSITS (PRINCIPAL AMOUNT) AS ON MARCH 31 2017 (`)
A) Deposits that have matured on or before March 31 2016 3296505000 46442000 3250063000
B) Deposits that were due to mature on or after April 1 2016 2252840000 26268000 2226572000
5549345000 72710000 5476635000

Pursuant to Section 74(2) of the Companies Act 2013 the Company had made anapplication to the Hon'ble Company Law Board (subsequently replaced by the Hon'bleNational Company Law Tribunal New Delhi) seeking extension of time for repayment of theoutstanding public deposits (including interest thereon) as is considered reasonable. TheCompany had also identified and earmarked 6 (six) unencumbered land parcels for sale andutilization of the sale proceeds thereof for repayment of the aforesaid outstandingdeposits. However during the financial year under review the Hon'ble National CompanyLaw Tribunal New Delhi (NCLT) vide its order dated 04.07.2016 dismissed the saidapplication. On appeal against the said order the Hon'ble National Company Law AppellateTribunal New Delhi (NCLAT) vide its order dated 03.11.2016 extended the date of repaymentof deposits upto 31.12.2016. Subsequently the said appeal was also disposed off by theHon'ble NCLAT vide its order dated 31.01.2017 without granting any further extension oftime. As explained and represented by management the Company is making best possibleefforts for sale of the land parcels earmarked for repayment of the deposits but such saleprocess is taking time due to global economic recession and liquidity crisisparticularly in the real estate sector of India. However regardless of these adversecircumstances and difficulties management has represented that they are committed torepay all the public deposits along with interest thereon. Considering that the managementhas not been able to comply with the directions given by the Hon'ble CLB NCLT and NCLATto repay the deposits within prescribed time-period the Registrar of Companies New Delhihas filed prosecution against the Company and its executive directors and key managerialpersonnel before the Ld. Special Court Dwarka District Court New Delhi. However theHon'ble High Court of Delhi has stayed the said prosecution. We are unable to evaluate theultimate likelihood of penalties/ strictures or further liabilities if any on theCompany. Accordingly impact if any of the above on the standalone Ind AS financialstatements is currently not ascertainable.

3. We draw your attention to Note no. 57 to the standalone Ind AS financialstatements. According to information available and explanations obtained in respect ofnon-current investments (Long term investments) in and loans and advances given to somesubsidiaries/a party (“the parties”) it has been observed from the perusal ofthe financial statements of these parties that the said parties have accumulated lossesand their respective net worth have been fully/substantially eroded. Further some ofthese parties have incurred net loss during the current year and previous year(s) andthat the current liabilities of these parties exceeded their respective current assets Asat 31st March 2017. These conditions along with absence of clear indications or plans forrevival in our opinion indicate that there is significant uncertainty and doubt aboutthe recovery of the loans and advances from these parties. Further there is a clearindication that there is a decline in the carrying amount of these investments which isother than temporary.

Consequently in terms of stated accounting policies and applicable accountingstandards diminution in the value of these investments which is other than temporaryamounting to `2343106651 upto 31st March 2017 (Previous year ended 31st March2016 - `4402510584) and an accrual for diminution of doubtful debts and advancesamounting to `3297491855 upto 31st March 2017 (Previous year ended 31st March2016

- `6904591276) needs to be accounted for. Management is however of the firmview that the diminution is only temporary and that sufficient efforts are beingundertaken to revive the said parties. However in the absence of significantdevelopments/movements in the operations of these parties and any adjustment fordiminution of carrying value of such investments in this regard in our opinionmanagement has not adequately or sufficiently accounted for the imminent diminution. Hadmanagement accounted for such diminution the loss for the year ended 31st March 2017would have been higher by `5640598506 (Previous year ended 31st March 2016- `11307101860).

4. We draw your attention to Note No.58 to the standalone Ind AS financialstatements whereinAdvances amounting to `6491240803 (previous year ended 31stMarch 2016 - `6508764168) are outstanding in respect of advances for thepurchase of land projects pending commencement joint ventures and collaborators whichas represented by the management have been given in the normal course of business to landowning companies collaborators projects and for purchase of land. As per informationmade available to us and explanations given to us `454023365 had been recovered /adjusted during the current year. The management based on internal assessments andevaluations has represented that the balance outstanding advances are stillrecoverable/adjustable and that no accrual for diminution of advances is necessary As at31st March 2017. The management has further represented that as significant amounts havebeen recovered/adjusted during the previous financial years and since constructive andsincere efforts are being put in for recovery of the said advances it is confident ofappropriately adjusting/recovering significant portions of the remaining outstandingbalance of such amounts in the foreseeable future. However we are unable to ascertainwhether all the remaining outstanding advances mentioned above are fullyrecoverable/adjustable since the said outstanding balances are outstanding/remainedunadjusted for a long period of time and further that neither the amounts recovered norrate of recovery of such long outstanding amounts in the previous years & currentyear despite confirmations from some parties clearly indicate in our opinion that allof the remaining outstanding amounts may be fully recoverable; consequently we are unableto ascertain whether all of the remaining balances As at 31st March 2017 are fullyrecoverable. Accordingly we are unable to ascertain the impact if any that may arise incase any of these remaining advances are subsequently determined to be doubtful ofrecovery.

5. We draw your attention to Note 59 to the standalone Ind AS financialstatements. The Company has received a ‘cancellation of lease deed' notice fromGreater Noida Industrial Development Authority (“GNIDA”) dated 18 November 2015.As per the Notice GNIDA has cancelled the lease deed in respect of Residential/GroupHousing plots on account of non-implementation of the project and non-payment of variousdues amounting to `10548326223. As per the notice and as per the relevantclause of the bye-laws/ contractual arrangement with the Company 25% of the total duesamounting to `1389342488 has been forfeited out of the total amount paid tilldate. The Company has incurred total expenditure of `21390794902 [comprising of(i) the amounts paid under the contract/bye-laws of `3422189575; (ii) thebalance portions of the total amounts payable including contractual interest accrued till31st March 2016 of `9909190197; and (iii) other construction costs amounting to`8059415130. The Company is also carrying a corresponding liability of `9909190197representing the total amounts payable to GNIDA including interest accrued and due of `6669204822.The said land is also mortgaged and the Company has registered such mortgage to a thirdparty on behalf of lender for the Non-Convertible Debenture (NCD) facility extended to theCompany and due to default in repayment of these NCDs the debenture holders have serveda notice to the Company under section 13(4) of the SARFEASI Act and have also takennotional possession of this land. Further the Company has contractually entered intoagreements to sell with 397 buyers and has also received advances from such buyersamounting to `920267391(net of repayment). No contract revenue has beenrecognized on this project. Management has written a letter to GNIDA dated 1st December2015 wherein it has stated that the cancellation of the lease deed is wrong unjust andarbitrary. Further management has also described steps taken for implementation of theproject valid business reasons due to delays till date. Further Management had alsoproposed that in view of the fact that third party interests have been created by theCompany in the allotted land by allotting plots to different allottees in the interestof such allottees GNIDA may allow the Company to retain an area of approximately 25 acresout of the total allotted land of approximately 100 acres and that the amount paid by theCompany till date may be adjusted against the price of the land of 25 acres and remainingsurplus amount may be adjusted towards dues of other projects of the Company under GNIDA.As informed and represented to us the discussions/ negotiations and the legal recourseprocess is currently underway and no solution/direction is ascertainable until the date ofthis report. In view of the materiality of the transaction/circumstances and uncertaintiesthat exist we are unable to ascertain the overall impact of the eventual outcome of theaforementioned notice/circumstance. Consequently we are unable to ascertain the impact ifany inter alia on carrying value of the project under ‘projects in progress' and onthe standalone Ind AS results of the Company.

As per management the Company GNIDA and the buyers have reached a consensus that thecancellation of lease deed will be revoked; however the same is uncertain as on the dateof this report.

Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the possible effects of the various matters described in the‘Basis for Qualified Opinion' paragraph above the aforesaid standalone Ind ASfinancial statements give the information required by the Act in the manner so requiredand give a true and fair view in conformity with the accounting principles generallyaccepted in India of the state of affairs of the Company As at 31st March 2017 and itsloss(including other comprehensive income) and its cash flows for the year ended on thatdate.

EMPHASIS OF MATTERS

1. We draw your attention to Note no. 56(c) to the standalone Ind AS financialstatements wherein no adjustments have been considered necessary by management fornon-recoverability of investments in share capital/projects aggregating to `279089174(Previous year ` 278172452) as the matters are sub-judice and the impact if any isunascertainable at this stage. Our opinion is not qualified in respect of this matter.

2. Reference is invited to Note 49(III)(e) to the standalone Ind AS financialstatements of the Company. The Company had received an arbitral award dated 6th July 2012passed by the London Court of International Arbitration (LCIA) wherein the arbitrationtribunal has directed the Company to invest USD

298382949.34 (Previous year USD 298382949.34) equivalent to `19346732699(Previous year `19792606340) in Kerrush

Investments Ltd (Mauritius). The High Court of Justice Queen's Bench DivisionCommercial Court London had confirmed the said award.

Though the Company believed on the basis of legal advice that the said award is notenforceable in India on various grounds including but not limited to lack ofjurisdiction by the LCIA appointed arbitral tribunal to pass the said award the aggrievedparty filed a petition with Hon'ble High Court of Delhi for enforceability of the saidaward. The Hon'ble High Court of Delhi has passed an order in the case instant.

Based on its own assessment and legal advice received the Company is sanguine &strongly believes that its stand taken in this matter will be vindicated in the Hon'bleSupreme Court. The Company is preparing for filing the SLP in the Hon'ble Supreme Courtagainst the said order of the Hon'ble High Court of Delhi.

Moreover in case the Company is required to make the aforesaid investment into KerrushInvestments Ltd. (Mauritius) its economic interest in the SRA project in Santacruz Mumbaishall stand increased proportionately thereby creating a substantial asset for the Companywith an immense development potential.

Based on the information obtained and audit procedures performed we are unable toassess the ultimate impact of financial the above whether the Company will berequired to make the investment in terms of the aforesaid award or not and if the saidaward is held to be enforceable in India then whether the underlying SRA project inSantacruz Mumbai would be substantial to justify the carrying value of these potentialinvestments. Our opinion is not qualified in respect of this matter.

OTHER MATTERS

1. We did not audit the financial statements/information of Libya branch officeincluded in the standalone Ind AS financial statements of the Company whose financialstatements/ information reflect total assets of `376794833 (Previous year

`397642887) As at 31st March 2017 and total revenues of ` NIL (Previous year ` NIL)for the year ended on that date as considered in the standalone Ind AS financialstatements and described above. The financial statements/information of this branch havenot yet been audited by the branch auditor due to the adverse political situationprevailing in Libya.

Our opinion is not qualified in respect of this matter.

2. The financial information of the Company for the year ended

March 31 2016 and the transition date opening balance sheet As at April 1 2015included in these standalone Ind AS financial statements are based on the previouslyissued statutory financial statements for the year ended March 31 2016 and

March 31 2015 prepared in accordance with the Companies (Accounting Standards) Rules2006 (as amended) which were audited by the previous auditors on which the said auditorshad expressed a qualified opinion dated May 30 2016 and May 29 2015 respectively.Adjustments to those financial statements for the differences in accounting principlesadopted by the Company on transition to the Ind AS have been audited by us.

Our opinion is not qualified in respect of this matter.

REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS

1. 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 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 and proper returnsadequate for the purposes of our audit have been received from the branch not visited byus.

(c) The reports on the accounts of the branch office of the

Company audited under Section 143 (8) of the Act by branch auditor have been sent to usand have been properly dealt with by us in preparing this report.

(d) The Balance Sheet the Statement of Profit and Loss

(including Other Comprehensive Income) the Statement of Changes in Equity and theCash Flow Statement dealt with by this Report are in agreement with the books of accountand with the returns received from the branch not visited by us.

(e) Except for the matters described in basis for qualified opinion paragraph abovein our opinion the aforesaid standalone Ind AS financial statements comply withthe

Indian Accounting Standards prescribed under Section 133 of the Act.

(f) The matters described in the basis for qualified opinion paragraph above in ouropinion may have an adverse effect on the functioning of the Company. (g) Referenceis drawn to note no. 54 and 55 to the standalone Ind AS financial statements with respectto unpaid matured non-convertible debentures and unpaid matured public depositsoutstanding As at balance sheet date and our qualification in paragraph 2 above under“Basis for

Qualified Opinion” in respect of these matters and ensuing uncertainties. TheCompany has failed to repay the deposits accepted by it including interest thereon. TheHon'ble Company Law Board (subsequently replaced by the Hon'ble National Company LawTribunal New Delhi) has acknowledged and noted the default in various orders passed byit till date in this regard. Further the Company has also failed to redeemNon-Convertible Debentures including interest thereon. The above mentioned failure to paydeposits or redeem debentures in our opinion has continued for one year or more.Considering the fact that application of the Company under Section 74(2) of the CompaniesAct 2013(or Act) seeking extension of time for repayment of the deposits has beendismissed by the Hon'ble Company Law Board (subsequently replaced by the Hon'ble NationalCompany Law Tribunal New Delhi) and the company's subsequent appeal has also beendisposed off by the Hon'ble National Company Law Appellate Tribunal New Delhi and theRegistrar of Companies New Delhi has filed prosecution against the Company and itsexecutive directors and key managerial personnel before the Ld. Special Court DwarkaDistrict Court New Delhi which has however been stayed by the Hon'ble High Court ofDelhi and the debentures have been issued on private placement basis to lender and not toinvestors the Board of the Company is of the view that the above delays in repayment/redemption as the case may be do not fall under the purview of sub-section (2) of Section164 of the Act. Accordingly in the opinion of management as also discussed and taken onrecord in the board meeting held to adopt theseInd AS financial statements of the Companyand further as represented by each of the Directors none of the Directors of the Companyare disqualified as on 31st March 2017 in terms of subsection (2) of the Section 164 ofthe Act.

In view of the above mentioned circumstances and the legal interpretation taken/considered by the Board of Directors and the resulting uncertainties we are unable tocomment on whether the Directors of the Company are disqualified under sub-section (2) ofSection 164 of the Act as required by us to state so.

(h) The qualifications relating to the maintenance of accounts and other mattersconnected therewith are as stated in the

“Basis for qualified opinion” paragraph above. (i) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in“Annexure A”. Our report expresses a qualified opinion on the adequacyand operating effectiveness of the Company's internal financial controls over financialreporting.

(j) 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 Ind AS financial statements Refer Note no. 49 (I) to thestandalone Ind AS financial statements; ii. The Company has made provision as requiredunder the applicable law or accounting standards for material foreseeable lossesonlong-term contracts. As per information provided and explanations give the companyhas not entered into any derivative contract; iii. There has been no delay in transferringamounts required to be transferred to the Investor Education and Protection Fund by theCompany. iv. The Company has provided requisite disclosures in the standalone Ind ASfinancial statements as regards its holding and dealings in Specified Bank Notes asdefined in the Notification S.O. 3407(E) dated the

November 2016 of the Ministry of Finance during the period from 8 November 2016 to30 December

2016. Based on audit procedures performed and the representations provided to us by themanagement we report that the disclosures are in accordance with the books of accountmaintained by the Company and as produced to us by the Management. - Refer Note no. 47 tothe standalone Ind AS financial statements.

2. As required by the Companies (Auditor's Report) Order 2016

(“the Order”) issued by the Central Government in terms of Section 143(11) ofthe Act and on the basis of such checks of the books and records of the Company as weconsidered appropriate and according to the information and explanations given to us wegive in “Annexure B” a statement on the matters specified in paragraphs 3 and 4of the Order.

For R. Nagpal associates

Chartered Accountants

Firm Registration No. 002626N

(Ravinder Nagpal)

Partner

Membership No. 081594

Place: Gurugram

Date: 30th May 2017

ANNEXURE TO THE AUDITORS' REPORT

“ANNEXURE A” TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE IND AS FINANCIAL STATEMENTS OF UNITECH LIMITED REPORT ON THE INTERNAL FINANCIALCONTROLS UNDER CLAUSE (I) OF SUB-SECTION 3 OF SECTION 143 OF THE COMPANIES ACT 2013(“THE ACT”)

We have audited the internal financial controls over financial reporting of UnitechLimited (“the Company”) as of 31st March 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 company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.

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 to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India. Those Standards and the Guidance Note require that we comply withethical requirements and plan and perform the audit to obtain reasonable assurance aboutwhether adequate internal financial controls over financial reporting was established andmaintained and if such controls operated 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.

Because of the matter described in Qualified Opinion paragraph below we werenot able to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial control system over financial reporting of the Company.

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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial statements in accordance with generally accepted accountingprinciples and that receipts and expenditures of the company are being made only inaccordance with authorisations of management and directors of the company; and

(3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial 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 controls over financial reporting tofuture periods are subject to the risk that the internal financial control over financialreporting may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.

QUALIFIED OPINION

1. According to the information and explanations given to us the Company hasestablished its internal financial control over financial reporting commensurate with itssize business environment IT systems and geographical spread where following areas needimprovement & expansion:

a. creditassessment of customers without establishing reasonable certainty of timely orultimate collection or considering the essential components of internal control stated inthe Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issuedby the Institute of Chartered Accountants of India.

b. project delays advances with joint ventures entities and collaborators resultingin the Company accounting for/ carrying such loans and advances without establishingreasonable certainty of ultimate collection/ recoverability on criteria based on orconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls Over Financial Reporting issued by the Institute ofChartered Accountants of India.

c. non-current investments (long term investments) in and loans and advances given tosome subsidiaries resulting in the Company accounting for/carrying such non-currentinvestments/loans without establishing/evaluating reasonable certainty of ultimaterecoverability and whether the carrying value of the said investments has diminished andsuch diminution is other than temporary on criteria based on or 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. Hence our opinion is qualified on adequacy of internal financial controls overfinancial reporting in respect of matters stated above.

2. The system of internal financial controls over financial reporting withregard to the significant processes namely project management and project revenue otherlaws and compliances litigation and claims receivables management and land managementare in the process of being enhanced/ strengthened. As represented by management theCompany has identified the processes to be improved and the necessary action plan has beenput in place. We have considered the qualifications reported above in determining thenature timing and extent of audit tests applied in our audit of the standalone Ind ASfinancial statements of the Company.

3. According to the information and explanation given to us the Company is inthe process of strengthening its internal financial control over financial reporting withrespect to evaluating Entity level controls inter alia controls over management overridethe Company's risk assessment process policies that address significant business controland risk management practices etc. on criteria based on or 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 R. Nagpal associates

Chartered Accountants

Firm Registration No. 002626N

(Ravinder Nagpal)

Partner

Membership No. 081594

Place: Gurugram

Date: 30th May 2017

“ANNEXURE B” TO THE INDEPENDENT AUDITOR'S REPORT

(Referred to in paragraph 2 under ‘Report on Other Legal and RegulatoryRequirements' section of our report of even date to the members of Unitech Limited on thestandalone Ind AS financial statements for the year ended 31st March 2017)

(i) In respect of its fixed assets:

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

(b) The fixedassets are physically verified by the management according to a phasedprogramme designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the

Company and the nature of its assets. Pursuant to this programme certain fixed assetswere by the management during the year and as informedno material discrepancies werenoticed on such verification.

(c ) According to the information and explanations given to us and the records examinedby us and based on the examination of the registered sale deeds provided to us we reportthat the title deeds comprising all the immovable properties of land and buildings whichare freehold are held in the name of the Company As at the balance sheet date.

(ii) As explained to us the inventories As at balance sheet date were physicallyverified during the year by the Management and no material discrepancies were noticed onsuch physical verification.

(iii) According to the information and explanations given to us the

Company has granted unsecured loans to fiftyfive subsidiaries companies covered in theregister maintained under section

189 of the Companies Act 2013 in respect of which:

(a) The loans given to thirty seven subsidiaries being short term loans repayable ondemand are interest free and the terms and conditions of the grant of such loans are notprima facie prejudicial to the interest of the Company considering Company's economicinterest in such entities as well as business exigency. The loans given to twosubsidiaries being short term loans payable on demand are interest bearing and the termsand conditions of the grant of such loans are not prima facie prejudicial to the interestof the Company considering Company's economic interest in such entities as well asbusiness exigency. However in respect of such interest free loans given to fifteensubsidiaries amounting to`863452811 we have qualified our main report aboveunder para 3 of ‘Basis for qualified opinion' on the potential non recovery of suchloans and accordingly the terms and conditions of the grant of such loans As at thebalance sheet date are prejudicial to the Company's interest. Similarly in respect ofsuch interest bearing loans given to one subsidiary amounting to `543157735/-we have qualified our main report above under para 3 of ‘Basis for qualified opinion'on the potential non-recovery of such loans and interest accrued thereon and accordinglythe terms and conditions of the grant As at the balance sheet date of such loans areprejudicial to the Company's interest.

(b) The loans granted are repayable on demand and accordingly there is no specificstipulation of the schedule of repayment of principal and interest. We are informed thatthe Company has not demanded repayment of any such loan during the year and thus therehas been no default on the part of the parties to whom the money has been lent.

(c) The said loans being repayable on demand and no demand for repayment being madetill date there is no overdue amount of loans granted to such parties. physicallyverified

(iv) According to the information and explanations given to us the Company has notgranted any loans to any of its directors or to any other person in whom the director isinterested under section 185 of the Companies Act 2013. Further the

Company being a company providing infrastructural facilities the provisions ofsub-sections (2) to (10) of Section 186 does not apply to the Company. The Company is notan investment company as defined in Explanation to section 186.

(v) The Company has not accepted any deposits under the provisions of sections 73 to 76or any other relevant provisions of the Companies Act 2013 and the rules framedthereunder. Further the Company had accepted deposits under Section 58 A of the erstwhileCompanies Act 1956.

In our opinion and according to the information and explanations given to us theCompany has not complied with requirement of section 74(1)(b) read with Rule 19 of theCompanies (Acceptance of deposits) Rules 2014 with regard to the deposits accepted fromthe public. The nature of contraventions are that the Company has total outstanding duesof `7809294611towards matured unpaid deposits & interest thereon as of March31 2017.

We also draw your attention to Note no. 55 with respect to unpaid matured deposits.Further as already highlighted in para 2 under ‘Basis for qualified opinion' in ourmain report abovethe application of the Company under Section 74(2) of the Companies Act2013(or Act) seeking extension of time for repayment of the deposits has been dismissed bythe Hon'ble Company Law Board (subsequently replaced by the Hon'ble National Company LawTribunal New Delhi) and the company's subsequent appeal has also been disposed off by theHon'ble National Company Law Appellate Tribunal New Delhi and the Registrar ofCompanies New Delhi has filed prosecution against the Company and its executive directorsand key managerial personnel before the Ld. Special Court Dwarka District Court NewDelhi which has however been stayed by the Hon'ble High Court of Delhi.

The following Orders have been passed in this regard by:

Order passed by Particulars of relevant order(s) Whether order(s) complied with
1 Order dated 31st January 2017 passed by Hon'ble National Company Law As described in detail in para 2 of “Basis for Qualified Opinion” the NCLAT observed that no specific efforts were taken by the Company and its Directors to pay back the dues of depositorsin terms of Section 74(1) read with Section 74(2) of the Companies The Company has paid `72710000 as principal besides interest thereon during the year 2016-17.
Appellate Tribunal Act 2013 (“the Act”)and that there was no ground to extend the period of re-payment of deposits beyond 31st December 2016 being the last date upto which extension had been granted to the Company.
New Delhi (NCLAT) arising out of Order dated 4th July 2016 passed by the National As explained the Company is making best possible efforts for sale of the land parcels earmarked for repayment of the deposits
Company Law Tribunal The directions given by NCLAT were as under:
New Delhi (NCLT) in Company petition (T) 10/8/2015 dated 4th July 2016 a) The Registrar of Companies(RoC) to pursue the case under Section 74(3) of the Act before the Special Judge.
b) The RoC to request the case is made out for punishment u/s 75 of the Act apart from Section 74(3) if there is any evidence of fraud. Special Court to find out whether a
2 Reserve Bank of India Not Applicable Not Applicable
3 Any court or any other tribunal Certain courts/ consumer courts have directed the Company to pay varying amounts

As explained and represented by management the Company has earmarked sixunencumbered land parcels including those in subsidiary Companies for sale and utilizationof sale proceeds thereof for repayment of deposits. Further as informed the managementis committed to repay all the deposits along with interest thereon and is making allefforts to arrange the necessary resources required for this purpose.

(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 Act and are of the opinion that prima facie the prescribed accountsand records have been made and maintained. We have however not made a detailedexamination of the records with a view to determine whether they are accurate or complete.

(vii) In our opinion and according to the information and explanations given to us inrespect of statutory dues:

(a) Undisputed statutory dues including employee's state insurance sales tax duty ofcustoms duty of excise value added tax cess and other statutory dues have generallybeen regularly deposited with the appropriate authorities.

However income tax service tax and provident fund dues have not been regularlydeposited with the appropriate authorities.

According to the information and explanations given to us no undisputed amountspayable in respect of employees' state insurance sales-tax duty of customs duty ofexcise cess and other undisputed statutory dues were outstanding at the year end for aperiod of more than six months from the date they became payable except for Income taxSales Tax Service tax and provident fund dues which are given below:

Nature of Dues Principal
Amount (`)
Income tax deducted at Source 762534155
WCT 8257808
CST 2193961
Service Tax 142008106
Employer's Contribution to Provident 177329361
Fund

(b) The following dues have not been deposited by the Company on account of disputessince the appeals are pending before the relevant authorities.

Name of the Statute Nature of Dues under dispute Financial year Unpaid demands (net of amount deposited) (`) Forum where dispute is pending
Income Tax Act 1961 Income tax on regular assessment 2004-05 7363246 Commissioner of Income Tax (Appeals) New Delhi
Income tax Act1961 Income tax on regular assessment 2006-07 53104997 Income Tax Appellate Tribunal New Delhi
Income tax Act1961 Tax deducted at Source on regular assessment 2007-08 16219162 Commissioner of Income Tax (Appeals) New Delhi
Income tax Act1961 Income tax on regular assessment 2009-10 2127867288 Income Tax Appellate Tribunal New Delhi
Income tax Act1961 Income tax on regular assessment 2010-11 965666459 Income Tax Appellate Tribunal New Delhi
Income tax Act1961 Tax deducted at Source on regular assessment 2011-12 116196935 Commissioner of Income Tax (Appeals) New Delhi
Income tax Act1961 Income tax on regular assessment 2011-12 755520570 Income Tax Appellate Tribunal New Delhi
Income tax Act1961 Tax deducted at Source on regular assessment 2012-13 168599180 Commissioner of Income Tax (Appeals) New Delhi
Income tax Act1961 Income tax on regular assessment 2012-13 1137095370 Income Tax Appellate Tribunal New Delhi
Income tax Act1961 Tax deducted at Source on regular assessment 2013-14 200077281 Commissioner of Income Tax(Appeals) New Delhi
Service Tax Service tax For the period 01/12/2005- 31/07/2007 7260129 SLP pending with Hon'ble Supreme Court
Service Tax Service tax 2012-13 93494668 CESTAT New Delhi
Haryana VAT Act 2003 VAT 2011-12 281988670 Jt. Excise & Taxation Commissioner (Appeals) Faridabad Haryana
Haryana VAT Act 2003 VAT 2012-13 163802119 Jt. Excise & Taxation Commissioner (Appeals) Faridabad Haryana

(viii) In our opinion and according to the information and explanations given to usthe Company has not defaulted in the repayment of loans or borrowings to Government.Further the Company has not generally defaulted to a financial institution bank or todebenture holders except as enumerated below: (a) In case of defaults in therepayment of loans or borrowings to financial institutions and banks :

Particulars Amount of Default of repayment As at balance sheet date period of default
Principal (`) Interest (`)
Due to financial institutions:
Globe Fincap Limited - 145987 Interest : 1 days
ICICI-HFCL Limited - 56689953 Interest : 1 to 90 days
IL&FS Financial Services Ltd. - 36682246 Interest : 1 to 32 days
Indiabulls Housing Finance 19600000 24797492 Principal : 22 to 81 days
Limited Interest : 17 to 90 days
LIC of India 1308000000 768112137 Principal : 664 to 2217 days
Interest : 1 to 1218 days
SREI Infrastructure finance 1544469935 605768141 Principal : 1 to 807 days
Limited Interest : 1 to 1021 days
Dues to Banks :
Axis Bank - 1821994 Interest : 1 to 183 Days
Bank of Maharashtra 77947033 19396232 Principal : 549 to 641 Days
Interest : 1 to 579 Days
HDFC Bank Limited 2520545242 566512448 Principal : 25 to 606 Days
Interest : 1 to 518 Days
ICICI Bank - 9493826 Interest : 1 to 24 Days
IDBI Bank Loan - 150477206 Interest : 1 to 60 Days
Oriental Bank of Commerce 9722220 7496096 Principal : 25 to 84 Days
Interest : 1 to 60 Days

Dispute with LIC of India is pending before the Debt Recovery Tribunal for finaladjudication. (b) In case of defaults in the repayment of dues to the debenture holders:

Particulars Amount of default of repayment As at balance sheet date period of default
Principal (`) Interest (`)
Due to debenture-holders 2085014496 1338467074 Principal : 107 to 1417 Days
(Issued to public financial institution on Private placement basis) Interest : 1 to 1432 Days

(ix) In our opinion and according to the information and explanations given to us theCompany has not raised any monies by way of initial public offer/ further public offer(including debt instruments). Further as per information and explanations provided theCompany has generally applied term loans for the purposes for which they were raised inaccordance with terms agreed with respective lenders.

(x) To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company and no fraud on the Company by its officers oremployees has been noticed or reported during the year.

(xi) To the best of our knowledge and according to the information and explanationsgiven to us the Company has neither paid nor provided for any managerial remunerationduring the year and hence reporting under clause (xi) of the Order is not applicable.

(xii) The Company is not a Nidhi Company and hence reporting under clause (xii) of theOrder is not applicable.

(xiii) In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 188 and 177 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements etc. as required by theapplicable accounting standards

(xiv) During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly convertible debentures and hence reporting underclause (xiv) of the Order not applicable to the Company.

(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 him and hence provisions of section

192 of the Companies Act 2013 are not applicable.

(xvi) The Company is not required to be registered under section

45-IA of the Reserve Bank of India Act 1934.

For R. Nagpal associates

Chartered Accountants

Firm Registration No. 002626N

(Ravinder Nagpal)

Partner

Membership No. 081594

Place: Gurugram

Date: 30th May 2017

Statement on Impact of Audit Qualifications (for audit report with modified submittedalong-with Annual Audited Standalone Financial Results

Statement on Impact of Audit Qualifications for the Financial Year ended March 31 2017

[Regulation 33 of the SEBI (LODR) Regulations 2016]

1 Particulars Audited Figures (as reported before adjusting for qualifications) Adjusted Figures (audited figures after adjusting for qualifications)
` Lacs ` Lacs
1 Turnover / Total income 19956.56 19956.56
2 Total Expenditure 52805.04 291409.64
3 Total tax expenses (11086.03) (11086.03)
4 Net Profit/(Loss) (21762.45) (260367.05)
5 Earnings Per Share
Basic (0.83) (9.95)
Diluted (0.83) (9.95)
6 Total Assets 1981254.66 1742650.06
7 Total Liabilities 1145058.76 1145058.76
8 Net Worth 836195.90 597591.30
9 Any other financial item(s) (as felt appropriate by the management) - -

2 Audit Qualifications:-

Matter 1

1 Details of Audit Qualification:-

“An amount of `119614.56 Lacs is outstanding As at 31st March 2017(Previous year ended 31st March 2016 `113430.59 Lacs) which is comprised of tradereceivables pertaining to sale of land properties trading goods finished goodscommercial plots/properties of various kinds. Some of these balances amounting to `22798.63Lacs As at 31st March 2017 (Previous year ended 31st March 2016 `22578.11 Lacs)are outstanding for significantly long periods of time. The management has explained thatsuch long overdue outstandings have arisen in the normal course of business fromtransactions with customers who have contravened the contractual terms. The management hasundertaken a detailed exercise to evaluate the reasons of such long outstandings as wellas possibility of recoveries. The management based on internal assessments andevaluations possible recoveries from securities (registered or unregistered) haverepresented that significant portion of such trade receivables outstandings are diminutionin value of trade receivables is therefore necessary As at 31st March 2017. However weare unable to ascertain whether all of the long overdue outstanding trade receivables arefully recoverable/adjustable since the outstanding balances As at 31st March 2017 areoutstanding/remained unadjusted for a long period of time. Based on our assessment andaudit procedures performed in our opinion trade receivables amounting to `22798.63Lacs are doubtful of recovery and consequently management ought to provide/accrue for thediminution for these balances. Had the management provided/accrued for the diminution invalue of the said trade receivables the carrying value of the trade receivables wouldhave been lower by `22798.63 Lacs and the loss for the year ended 31st March 2017would have been higher by `22798.63 Lacs. The opinion of the previous Auditors onthe standalone financial statements for the year ended 31st March 2016 was also qualifiedin respect of this matter”

2 Type of Audit Qualification: Qualified Opinion

3 Frequency of qualification: Appeared 2nd time

4 For Audit Qualification(s) where the impact is quantified by theauditor Management'sViews:

Management based on internal assessments and evaluations possible recoveries fromsecurities (registered or unregistered) have represented that significant portion of suchtrade receivables balance outstanding are still recoverable/ adjustable and that noaccrual for diminution in value of trade receivables is therefore necessary As at 31stMarch 2017. They are confident of appropriately adjusting / recovering significantportions of the remaining outstanding balance of such amounts in the foreseeable future.

5 For Audit Qualification(s) where the impact is not quantified by the NA
(i) Management's estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact reasons for the same:
(iii) Auditors' Comments on (i) or (ii) above:
6 Amount involved in qualification in` lacs 22798.63

Matter 2

1 Details of Audit Qualification:-

According to information available and explanations obtained in respect of non-currentinvestments (Long term investments) in and loans and advances given to somesubsidiaries/a party(“the parties”) it has been observed from the perusal ofthe financial statements of these parties that the said parties have accumulated lossesand their respective net worth have been fully/substantially eroded. Further some ofthese partieshave incurred net loss during the current year and previous year(s) and thatthe current liabilities of these parties exceeded their respective current assets As at31stMarch 2017. These conditions along with absence of clear indications or plans forrevival in our opinion indicate that there is significant uncertainty and doubt aboutthe recovery of the loans and advances from these parties. Further there is a clearindication that there is a decline in the carrying amount of these investments which isother than temporary. Consequently in terms of stated accounting policies and applicableaccounting standards diminution in the value of these investments which is other thantemporary amounting to `23431.07 Lacs upto 31st March 2017 (Previous year ended31st March 2016 - `44025.10 Lacs ) and an accrual for diminution of doubtfuldebts and advances amounting to `32974.92 Lacs upto 31st March 2017 (Previous yearended 31st March 2016 - `69045.91 Lacs) needs to be accounted for. Management ishowever of thefirmview that the diminution is only temporary and that sufficient effortsare being undertaken to revive the said parties. However in the absence of significantdevelopments/movements in the operations of these parties and any adjustment fordiminution of carrying value of such investments in this regard in our opinionmanagement has not adequately or sufficiently accounted for the imminent diminution. Hadmanagement accounted for such diminution the loss for the year ended 31stMarch 2017 wouldhave been higher by `56405.99 Lacs (Previous year ended 31st March 2016- `113071.02lacs). The opinion of the previous Auditors on the standalone financial statements for theyear ended 31st March 2016 was also qualified in respect of this matter”

2 Type of Audit Qualification: Qualified Opinion

3 Frequency of qualification: Repetitive 3rd year

4 For Audit Qualification(s) where the impact is quantified by theauditor Management'sViews:

Management has evaluated this matter and is of the firm view that the and thatsufficient efforts are being undertaken to revive the said subsidiaries in the foreseeablefuture so as to recover carrying value of the investment. Further management believesthat the loans and advances given to these companies are considered good and recoverablebased on the future projects in these subsidiaries and accordingly no provision/impairment other than those already accounted for has been considered necessary.

5 For Audit Qualification(s) where the impact is not quantified by the NA
(i) Management's estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact reasons for the same:
(iii) Auditors' Comments on (i) or (ii) above:
6 Amount involved in qualification in` lacs 56405.99

Matter 3

1 Details of Audit Qualification:-

As at March 31 2017 an amount of `64912.40 Lacs (previous year ended 31stMarch 2016 `65087.64 Lacs) are outstanding in respect of advances for purchase ofland projectspending commencement joint ventures and collaborators which as representedby the management have been given in the normal course of business to land owningcompanies collaborators projects and for purchase of land. As per information madeavailable to us and explanations given to us `4540.23 Lacs had been recovered /adjusted during the current year. The management based on internal assessments andevaluations has represented that the balance outstanding advances are stillrecoverable/adjustable and that no accrual for diminution of advances is necessary As at31st March 2017. The management has further represented that as significant amounts havebeen recovered/adjusted duringthepreviousfinancialyears and since constructive and sincereefforts are being put in for recovery of the said advances it is confident ofappropriately adjusting/recovering significant portions of the remaining outstandingbalance of such amounts in the foreseeable future. However we are unable to ascertainwhether all the remaining outstanding advances mentioned above are fullyrecoverable/adjustable since the said outstanding balances are outstanding/remainedunadjusted for a long period of time and further that neither the amounts recovered norrate of recovery of such long outstanding amounts in the previous years& current yeardespite confirmations from some parties clearly indicate in our opinion that all of theremaining outstanding amounts may be fully recoverable; consequently we are unable toascertain whether all of the remaining balances As at 31stMarch 2017 are fullyrecoverable. Accordingly we are unable to ascertain the impact if any that may arise incase any of these remaining advances are subsequently determined to be doubtful ofrecovery. This matter was also qualified in their report on the standalone financialstatements for the year ended 31st March 2016”

2 Type of Audit Qualification: Qualified Opinion

3 Frequency of qualification: Repetitive 6th year

4 For Audit Qualification(s) where the impact is quantified by theauditor Management'sViews:

Advances for the purchase of land projects pending commencement and to joint venturesand collaborators have been given in the normal course of business to land owningcompanies collaborators projects and for purchase of land. The management of the companybased on the internal assessment and evaluations considers that these advances which arein the normal course of business are recoverable/adjustable and that no provision otherthan those already accounted for is necessary at this stage. The management is confidentof recovering/ appropriately adjusting the balance in due course

5 For Audit Qualification(s) where the impact is not quantified by the NA
(i) Management's estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact reasons for the same:
(iii) Auditors' Comments on (i) or (ii) above:
6 Amount involved in qualification in` lacs 64912.41

Matter 4

1 Details of Audit Qualification:-

The Company has received a ‘cancellation of lease deed' notice from Greater NoidaIndustrial Development

Authority (“GNIDA”) dated 18 November 2015. As per the Notice GNIDA hascancelled the lease deed in respect of Residential/Group Housing plots on account ofnon-implementation of the project and non-payment of various dues amounting to`105483.26 Lacs. As per the notice and as per the relevant clause of thebye-laws/contractual arrangement with the Company 25% of the total dues amounting to`13893.42 Lacs has been forfeited out of the total amount paid till date. The Company hasincurred total expenditure of `213907.95 Lacs [comprising of

(i) the amounts paid under the contract/bye-laws of `34221.90 Lacs

(ii) the balance portions of the total amounts payable including contractual interestaccrued till 31st March 2016 of `99091.90 Lacs; and

(iii) other construction costs amounting to `80594.15 Lacs]. The Company is alsocarrying a corresponding liability of `99091.90 Lacs representing the total amountspayable to GNIDA including interest accrued and due of `66692.05 Lacs. The said land isalso mortgaged and the Company has registered such mortgage to a third party on behalf oflender for the Non-Convertible Debenture (NCD) facility extended to the Company and dueto default in repayment of these NCDs the debenture holders have served a notice to theCompany under section 13(4) of the SARFEASI Act and have also taken notional possession ofthis land. Further the Company has contractually entered into agreements to sell with 397buyers and has also received advances from such buyers amounting to `9202.67 Lacs (net ofrepayment). No contract revenue has been recognized on this project. Management haswritten a letter to GNIDA dated 1st December 2015 wherein it has stated that thecancellation of the lease deed is wrong unjust and arbitrary. Further management hasalso described steps taken for implementation of the project valid business reasons dueto delays till date. Further Management had also proposed that in view of the fact thatthird party interests have been created by the Company in the allotted land by allottingplots to different allottees in the interest of such allottees GNIDA may allow theCompany to retain an area of approximately 25 acres out of the total allotted land ofapproximately 100 acres and that the amount paid by the Company till date may be adjustedagainst the price of the land of 25 acres and remaining surplus amount may be adjustedtowards dues of other projects of the Company under GNIDA. As informed and represented tous the discussions/ negotiations and the legal recourse process is currently underway andno solution/direction is ascertainable until the date of this report.

In view of the materiality of the transaction/circumstances and uncertainties thatexist we are unable to ascertain the overall impact of the eventual outcome of theaforementioned notice/circumstance. Consequently we are unable to ascertain the impact ifanyinter alia on carrying value of the project under ‘projects in progress' and onthe standalone Ind AS financial resultsof the Company. The opinion of the previousAuditors on the standalone financial statements for the year ended 31st March 2016 wasalso qualified in respect of this matter”

2 Type of Audit Qualification: Qualified Opinion

3 Frequency of qualification: Appeared 2nd time

4 For Audit Qualification(s) where the impact is quantified by theauditor Management'sViews:

Management has written a letter to GNIDA dated 1 December 2015 wherein management hasstated that the cancellation of the lease deed is wrong unjust and arbitrary. Managementhas also described steps taken for implementation of the project valid business reasonsdue to delays till date. Further Management had also proposed that in view of the factthat third party interests have been created by the Company in the allotted land byallotting plots to different allottees in the interest of such allottees GNIDA may allowthe Company to retain an area of approximately 25 acres out of the total allotted land ofapprox. 100 acres and that the amount paid by the Company till date may be adjustedagainst the price of the land of 25 acres and remaining surplus amount may be adjustedtowards dues of other projects of the Company under GNIDA. The company has been informedduring the meeting held with GNIDA officials on 30.05.2017 that the authority is revokingthe cancellation of the lease deed of the said plot and shall reinstate the land positionas it was before.

5 For Audit Qualification(s) where the impact is not quantified by the NA
(i) Management's estimation on the impact of audit qualification:
(ii) If management is unable to estimate the impact reasons for the same:
(iii) Auditors' Comments on (i) or (ii) above:
6 Amount involved in qualification in` lacs 99091.90

For R Nagpal associates

Chartered Accountants

FRN: 002626N

Ca Ravinder Nagpal partner

Membership No.081594

Place: Gurugram Date: 30th May 2017

For and on behalf of the Board of Directors

Ajay Chandra Sanjay Chandra g.R ambwani Deepak KumarTyagi
Managing Director Managing Director Chairman Audit Committee Chief Financial Officer
DIN : 00004234 DIN : 00004484 DIN : 00216484