To the Members of
Ansal Properties & Infrastructure Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements ofAnsal Properties & Infrastructure Limited ("the Company") which comprisethe balance sheet as at March 31 2021 the statement of profit and loss including thestatement of other comprehensive income the cash flow statement and the statement ofchanges in equity for the year then ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred as "standalone financial statements").
In our opinion and to the best of our information and according to theexplanations given to us except for the possible effects of the matter described in theBasis for Qualified Opinion Paragraph the aforesaid standalone financial statements givethe information required by the Companies Act 2013 ("the Act") in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2021its loss including other comprehensive income its cash flows and the changes in equityfor the year ended on that date.
Basis for Qualified Opinion
a. We draw attention to note no 44 of the standalone financialStatements wherein the Company has purchased properties aggregating to Rs. 16078 lakhfrom one of its subsidiary (holding 70.57% equity shares) Ansal Townships InfrastructureLimited (ATIL) in the financial year 2011 -12. The Company has not paid Rs. 14374 lakhout of the above consideration to ATIL till date. ATIL is demanding interest on delayedpayment of the outstanding amount @18% per annum. However the Company has denied suchdemand on the basis that there is no such clause in the agreement entered into with ATILand has not provided for any interest on the outstanding amount in its books of account.In view of above we are unable to ascertain the possible impact it may have on the profitand financial position of the Company and hence not commented upon.
b. We draw attention to note no 44 of the standalone financialStatements wherein ATIL has not made provision for interest receivable on advance of Rs.1620 lakh given to the Company. One of the minority investor shareholder of the ATIL"IIRF India Realty Ltd" has objected to granting interest free advance and hasdemanded that the ATIL recover interest @ 18% per annum on the amount so advanced. Theinterest receivable amounts to Rs. 291.60 lakh for year ended March 312021 from theCompany. The Company has not made any provision for interest payable of Rs. 291.60 lakh toATIL. As a result loss of the Company and its liabilities are understated by this amount.
c. We draw attention to note no 49 to the standalone financialstatements wherein the Company has entered into a business transfer agreement (BTA)between PE investor in New Look Builders & Developers Private Limited (Formerly knownas Ansal Phalak Infrastructure Private Limited APIPL) subsidiary of the Company on thebasis of interim arbitration award/ master settlement agreement (MSA). As per MSA 93% ofthe equity share capital of the Company is now held by PE investor. As a result APIPL isnot a subsidiary of the Company.
The final arbitration award will be subject to final audit report ofKPMG appointed as per section 26 of the Arbitration Act. KPMG will audit all thetransactions undertaken since incorporation. Any shortfall or excess of amount payable orreceivable due to their findings will be adjusted subsequently. We have been informed bythe Company that the audit of KPMG is under progress. The Company has already booked aloss of Rs. 9860 lakh in the statement. The final amount will be determined subsequent tothe report of KPMG not ascertainable at this stage and hence not recorded.
We further report that without considering items mentioned at para(a) (b) and (c) above the effect of which could not be determined had the observationsmade by us in para (b) above been considered the loss for the year would have been Rs.2236.84 lakh (as against the reported figure of total comprehensive loss of Rs. 1945.24lakh) current financial liabilities would have been Rs. 58599.83 lakh (as against thereported figure of Rs. 58308.23 lakh) and debit balance of reserves and surplus wouldhave been Rs. 114084.98 lakh (as against the reported figure of Rs. 113793.37 lakh).
We conducted our audit of the standalone financial statements inaccordance with the Standards on Auditing (SAs) as specified under section 143(10) of theAct. Our responsibilities under those Standards are further described in the 'Auditor'sResponsibilities for the Audit of the Standalone Financial Statements' section of ourreport. We are independent of the Company in accordance with the 'Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the financial statements under the provisions of the Actand the Rules there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the Code of Ethics. We believe that the auditevidence we have obtained is sufficient and appropriate to provide a basis for ourqualified audit opinion on the standalone financial statements.
Emphasis of Matter
a. We draw attention to note 41 of the accompanying standalonefinancial statements for the year ended March 31 2021 which describes that the Companyhad claimed a cumulative exemption of Rs. 3448 lakh up to the period ended March 312011 continuing up to the end of current period under section 80 IA of the Income TaxAct 1961 being tax profits arising out of sale of Industrial Park units pending thenotification of the same by Central Board of Direct Taxes (Competent Authority). TheCompetent Authority rejected the initial application against which the Company has filedreview petition. The Company has taken opinion from a senior counsel that its reviewpetition satisfies all the conditions specified in the said Scheme of Industrial Parkunder Industrial Park (Amendment) Scheme 2010. No exemption is claimed during the currentyear as there are no sales of industrial park units.
b. We draw attention to note 64 of the accompanying standalonefinancial statements for the year ended March 312021 pursuant to Orders of the CompanyLaw Board (CLB) dated the December 30 2014 and April 28 2016 the Company was requiredto refund all its public deposits as per the schedule. Further as per National CompanyLaw Tribunal (NCLT) Order dated January 13 2017 and in response to an application filedby the Company as amended/extended from time to time the Company was required to repayRs. 200 lakh per month (Rs. 100 lakh per month from January 2019 onwards) as per revisedschedule. As on March 31 2021 an amount of Rs. 3506 lakh is overdue for payment (out oftotal outstanding principal of Rs. 8996 lakh). The Company's petition regarding revisedschedule for repayment of deposits and interest thereon is pending before NCLT Next dateof hearing is July 20 2021.
c. We draw attention to note 64 of the accompanying standalonefinancial statements wherein as per section 73(2) of the Act read with Order of NationalCompany Law Tribunal (NCLT) dated 30 December 2014 the Company is required to deposit atleast 6% (30% of the 20% amount as mention in deposit rules as amended) of the amount ofPublic deposits maturing during the following financial year and be kept in a schedulebank in a separate bank account as liquid funds and shall not be utilized for any purposeother than repayment of Public Deposits. However Hon'ble NCLT vide its order dated20.02.2020 exempted the Company to deposit the said liquid fund exempted with ScheduleBank in separate account till 31.03.2021.
d. We draw attention to note 53 of the accompanying standalonefinancial statements wherein IIRF India Realty Limited - II fund "ForeignInvestor" and IL & FS Trust Company Limited (acting as Trustee of IFIN RealtyTrust) through its manager IL&FS Investment Managers Limited "IndianInvestor" had invested an amount of Rs. 7934 Lakh in Equity Shares and CompulsorilyConvertible Preference Shares (CCPS) of Ansal Townships Infrastructure Limited asubsidiary of the Company. The Company has purchased part of the investment i.e. 40.66%and remaining part is still pending. The investor has invoked Arbitration clause and finaloutcome is still pending.
e. We draw attention to note 51 of the accompanying standalonefinancial statements for the year ended March 312021 as per prescribed norms issued byReserve Bank of India (RBI) and the exercise of powers conferred on the Bank underSecuritization and Reconstruction of Financial Assets and Enforcement of Security InterestAct 2002 (SARFAESI) the lender banks have issued notices the details of which are asfollows:
i) Allahabad Bank [now merged with INDIAN Bank] had earlier inprinciple agreed to the Company's proposal for restructuring of outstanding loan of Rs.10360 lakh. The Case filed by the Bank in DRT is pending and next date is 01/09/2021.Settlement with bank is also under process.
ii) The Company has taken a loan of Rs. 4500 lakh and now theoutstanding principal is Rs. 3303 lakh from Indian Bank Lucknow for construction ofGolf Gateway Towers Sushant Golf City Lucknow. Due to change in height of the tower FSIarea of the project got reduced and therefore the Company has decided not to furtherconstruct the Project. The Bank declared the loan as NPA. Indian Bank has filed recoverysuite against the Company in DRT. Settlement with bank is also under process.
iii) The Company is availing Working Capital facility - Fund BasedLimits of Rs. 3100 lakh and Bank Guaranty facility of Rs. 1950 lakh from Jammu &Kashmir Bank. There are over dues of Rs. 790 lakh in the fund based facility due to levyof interest and as such the account is classified as NPA. The Company wish to close one CClimit of Rs. 1550 lakh from the sale proceeds of mortgaged property.
iv) ILFS Financial Services Limited ("IFIN") filed anapplication in NCLT against the recovery of its dues and the Company has submitted aproposal to IFIN to pay Rs. 10900 lakh as full & final settlement and IFIN is alsoconsidering this favorably.
f. We draw attention to note 47 of the accompanying standalonefinancial statements for the year ended March 312021 which describes the Company and thedebenture holders of a subsidiary company having overdue principal amount of Rs. 13791lakhs have filed cases on each other for their dues/claim in Hon'ble Mumbai High Court.The Company has given corporate guarantee to the debenture holders on behalf of the AHTL.Debenture holders as moved an application with NCLT and the next date of hearing in NCLTis 22/09/2021. Meanwhile the Company along with its Group Company namely AnsalColonizers and Developers Pvt. Ltd. have settled NCDs aggregating of the principal amountof Rs. 6209 lakhs from the investors by way of barter of properties and down payments.The Company is also negotiating for One Time Settlement with the debenture holdersrepresented by its manager Peninsula BrookField for the remaining NCDs so that all thecases by both the parties may be withdrawn.
g. We draw attention to note 43 of the accompanying standalonefinancial statements for the year ended March 31 2021 wherein the Company has received anArbitration Award relating to litigation with Landmark Group wherein The Awardcontemplates joint and several liability of four companies of Ansal Group including theCompany amounting to Rs. 5578 Lakh along with interest amounting to Rs. 10508 Lakh. TheCompany has sought legal recourse. The matter is subjudice and next hearing date beforeHon'ble High Court is 05.07.2021.
h. We draw attention to note 48 of the accompanying standalonefinancial statements for the year ended March 312021 The Company has received Show CauseNotice from UP RERA wherein it was directed to give para-wise compliance in connectionwith their previous Notice against 6 Projects UPRERAPRJ7122 UPRERAPRJ10009UPRERAPRJ9594 UPRERAPRJ4754 UPRERAPRJ7090 and UPRERAPRJ10150 located at Sushant GolfCity Lucknow. In respect of three project bearing RERA No UPRERAPRJ7122 UPRERAPRJ7090and UPRERAPRJ9594 where RERA authorities have taken coercive action. The company has filedappeal before appellate forum. With regard to another project bearing No UPRERAPRJ10009UPRERAPRJ10150 and UPRERAPRJ4754 company is in process of implementing the directiongiven by RERA authorities.
i. We draw attention to Note No. 45 of the accompanying standalonefinancial Statements which describes the impact of Covid-19 the management of theCompany was not able to perform year-end physical verification of inventory at certainlocations. However the Company is under process of conducting the physical verificationsubsequent to the year-end. Consequently we have performed alternative procedures toaudit the existence of inventory as per the guidance provided in SA-501 "AuditEvidence-Specific consideration for selected items" and have obtained sufficientappropriate audit evidence to verify the existence and value of inventory as on March 312021.
Our opinion is not modified in respect of above matters.
Material Uncertainty on Going Concern
We draw attention to the Note 42 of the standalone financialstatements the accumulated losses of the Company as on March 312021 is Rs. 113793.37Lakh (these accumulated losses were partly due to the reversal of earlier profits of Rs.117518.87 Lakh in retained earnings as at April 1 2018 by the Company on adoption ofInd AS - 115 "Revenue from Contracts with Customers" with effect from April 12018). As at March 31 2021 the accumulated losses exceed the share capital and freereserves of the Company. Due to recession in the industry and current Covid situation inIndia the Company continues to face challenges in liquidity of inventory andprofitability. The management of the company has taken various initiatives and in view ofits confidence in achieving these initiatives the management has assessed that the goingconcern assumption is appropriate in the preparation of the standalone financialstatements of the Company for the year ended March 312021. Our opinion is not modified inrespect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements for thefinancial year ended March 312021. These matters were addressed in the context of ouraudit of the standalone financial statements as a whole and in forming our opinionthereon and we do not provide a separate opinion on these matters. For each matter belowour description of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key auditmatters to be communicated in our report. We have fulfilled the responsibilities describedin the Auditor's Responsibilities for the audit of the standalone financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone financial statements. The results of our auditprocedures including the procedures performed to address the matters below provide thebasis for our audit opinion on the accompanying standalone financial statements.
|Key audit matters ||How our audit addressed the key audit matters |
|Assessment of net realisable value (NRV) of inventories. || |
|The Company's inventory comprises of ongoing and completed real estate projects unlaunched projects and development rights. As at March 31 2021 the carrying values of inventories amounts to Rs. 357480.33 Lakh. ||Our audit procedures/ testing included among others: |
|The inventories are carried at the lower of the cost and net realizable value ('NRV'). || We read and evaluated the accounting policies and disclosures made in the financial statements with respect to inventories; |
|The determination of the NRV involves estimates based on prevailing market conditions current prices and expected date of commencement and completion of the project the estimated future selling price cost to complete projects and selling costs. || Evaluating the management's valuation methodology and assessing the key estimates data inputs and assumptions adopted in the valuations which included comparing expected future average selling prices with available market data such as recently transacted prices for similar properties located in the nearby vicinity of each property development project and the sales budget plans maintained by the Company; |
|Considering significance of the amount of carrying value of inventories in the financial statements and the involvement of significant estimation and judgement in such assessment of NRV the same has been considered as key audit matter. || Verifying the NRV assessment and comparing the estimated construction costs to complete each development with the Company's updated budgets. |
| || We have tested the NRV of the inventories to its carrying value in books on sample basis. |
|Assessing impairment of Investments in subsidiaries and joint venture || |
|The Company has significant investments in its joint ventures and associates. ||Our procedures in assessing the management's judgement for the impairment assessment included among others the following: |
|As at 31 March 2021 the carrying values of Group's investment in its subsidiaries and joint venture entities amounts to Rs. 67954.11 lakh. || We assessed the Group's valuation methodology applied in determining the recoverable amount of the investments; |
|Management reviews regularly whether there are any indicators of impairment of the investments by reference to the requirements under Ind AS 36 "Impairment of Assets". || We obtained and read the valuation report used by the management for determining the fair value ('recoverable amount') of its investments; |
|For investments where impairment indicators exist significant judgments are required to determine the key assumptions used in the discounted cash flow models such as revenue growth unit price and discount rates. || We considered the independence competence and objectivity of the management specialist involved in determination of valuation; |
|Considering the impairment assessment involves significant assumptions and judgement the same has been considered as key audit matter. || We tested the fair value of the investment as mentioned in the valuation report to the carrying value in books; |
| || Made inquiries with management to understand key drivers of the cash flow forecasts discount rates etc and assessed the reasonableness thereof; |
| || Involved experts to review the assumptions used by the management specialists. We reviewed the disclosures made in the financial statements regarding such investments. |
|Assessment of the going concern of the Company || |
|The accumulated losses as on March 31 2021 is Rs. 113793.37 lakh (major part of accumulated losses was due to the Company adopting Ind AS - 115 "Revenue from Contracts with Customers" with effect from 01.04.2018 resulting in reversal of earlier profits Rs. 117518.87 lakh in retained earnings as at 01.04.2018). ||Our audit procedures to assess the going concern of the Company in view of the liquidity issues being faced by the Company included the following: |
|As a result accumulated losses exceed the share capital and free reserves of the Company. Due to recession in the industry the Company continues to face liquidity issues due to multiple repayment and statutory obligations. || Inquire of management as to its knowledge of events or conditions and related business risks beyond the period of assessment used by management that may cast doubt on the entity's ability to meet its financial commitments continue as a going concern. |
|These events or conditions indicate that there are conditions existing that may have some impact on the Company's ability to continue as a going concern. || Analysis and discussion of cash flow profit and other relevant forecasts with management. |
|In view of management facing liquidity issues the management has taken various initiatives to revive their liquidity position and in view of its confidence in achieving these initiatives the accounts have been prepared on the same accounting assumptions. || Reading of minutes of the meetings of shareholders board of directors and other important committees for reference to financing difficulties. |
| || Obtaining written representation from management concerning plans for future action whose outcome is expected to mitigate the situation. |
Information other than the standalone financial statements andAuditor's Report thereon
The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Director's Report including Annexures to Director's ReportCorporate Governance and Shareholder's Information but does not include the standalonefinancial statements and our auditor's report thereon. The other information is expectedto make available to us after the date of this Auditor's Report.
Our opinion on the standalone financial statements does not cover theother information and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statementsour responsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the financial statements or ourknowledge obtained in the audit or otherwise appears to be materially misstated.
When we read other information and if we conclude that there is amaterial misstatement therein we are required to communicate the matter to those chargedwith governance.
Responsibilities of Management and Those Charged with Governance forthe Standalone Ind AS Financial Statements
The Company's Board of Directors is responsible for the matters statedin section 134(5) of the Act with respect to the preparation of these standalone financialstatements that give a true and fair view of the financial position financial performanceincluding other comprehensive income cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theIndian Accounting Standards (Ind AS) specified under Section 133 of the Act read with 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 controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the standalone financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management isresponsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
The Board of Directors are also responsible for overseeing theCompany's financial reporting process.
Auditor's Responsibilities for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether thestandalone financial statements as a whole are free from material misstatement whetherdue to fraud or error and to issue an auditor's report that includes our opinion.Reasonable assurance is a high level of assurance but is not a guarantee that an auditconducted in accordance with SAs will always detect
a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professionaljudgment and maintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of thestandalone financial statements whether due to fraud or error design and perform auditprocedures responsive to those risks and obtain audit evidence that is sufficient andappropriate to provide a basis for our opinion. The risk of not detecting a materialmisstatement resulting from fraud is higher than for one resulting from error as fraudmay involve collusion forgery intentional omissions misrepresentations or the overrideof internal control.
Obtain an understanding of internal control relevant to theaudit in order to design audit procedures that are appropriate in the circumstances. UnderSection 143(3)(i) of the Act we are also responsible for expressing our opinion onwhether the Company has adequate internal financial controls system in place and theoperating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and thereasonableness of accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the goingconcern basis of accounting and based on the audit evidence obtained whether a materialuncertainty exists related to events or conditions that may cast significant doubt on theCompany's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of thestandalone financial statements including the disclosures and whether the standalonefinancial statements represent the underlying transactions and events in a manner thatachieves fair presentation.
We communicate with those charged with governance regarding amongother matters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
We also provide those charged with governance with a statement that wehave complied with relevant ethical requirements regarding independence and tocommunicate with them all relationships and other matters that may reasonably be thoughtto bear on our independence and where applicable related safeguards.
From the matters communicated with those charged with governance wedetermine those matters that were of most significance in the audit of the standalonefinancial statements for the financial year ended March 31 2021 and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
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 of the Act we give in the "Annexure 1" a statement on thematters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained except for the possible effect of thematter described in the 'Basis for Qualified Opinion Paragraph above' all the informationand explanations which to the best of our knowledge and belief were necessary for thepurposes of our audit;
(b) In our opinion except for the possible effect of the matterdescribed in the 'Basis for Qualified Opinion Paragraph above' proper books of account asrequired by law have been kept by the Company so far as it appears from our examination ofthose books;
(c) The balance sheet the statement of profit and loss including 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 except for the possible effect of the matterdescribed in the 'Basis for Qualified Opinion Paragraph above' the aforesaid standalonefinancial statements comply with the Accounting Standards specified under Section 133 ofthe Act read with Companies (Indian Accounting Standards) Rules 2015 as amended;
(e) The matters described in the Basis of Qualified Opinion paragraphabove in our opinion may have an adverse effect on the functioning of the Company.
(f) On the basis of the written representations received from thedirectors as on March 31 2021 taken on record by the Board of Directors none of thedirectors is disqualified as on March 31 2021 from being appointed as a director in termsof Section 164 (2) of the Act;
(g) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these standalone financialstatements and the operating effectiveness of such controls refer to our separate Reportin "Annexure 2" to this report;
(h) In our opinion the managerial remuneration for the year endedMarch 31 2021 has been paid / provided by the Company to its directors in accordance withthe provisions of Section 197 read with Schedule V to the Act;
(i) With respect to the other matters to be included in the Auditor'sReport in accordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 asamended in our opinion and to the best of our information and according to theexplanations given to us:
i. The Company has except for the possible effect of the matterdescribed in the 'Basis for Qualified Opinion Paragraph above' disclosed the impact ofpending litigations on its financial position in its standalone financial statements -refer note 39 to the standalone financial statements;
ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses;
iii. There has been no delay in transferring amounts required to betransferred to the Investor Education and Protection Fund by the Company.
Annexure 1 to the Independent Auditor's Report to the Members of AnsalProperties & Infrastructure Limited dated June 29 2021.
Report on the matters specified in paragraph 3 of the Companies(Auditor's Report) Order 2016 ("the Order') issued by the Central Government ofIndia in terms of section 143(11) of the Companies Act 2013 ("the Act") asreferred to in paragraph 1 of Report on Other Legal and Regulatory Requirements'section.
i. (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of fixed assets.
(b) The Company has a phased program of physical verification of itsfixed assets which in our opinion is reasonable having regard to the size of the Companyand the nature of its assets. All the fixed assets identified during the year forverification have not been physically verified by the management. However discrepanciesnoticed during physical verification were not material and have been accounted for in thebooks of account to the extent of verification carried out.
(c) In our opinion and according to the information and explanationsgiven to us the title deeds of immovable properties are held in the name of the Company.
ii. The management of the Company has conducted physical verificationof inventory at reasonable intervals during the year and no material discrepancies werenoticed on such physical verification. (Read with note no 45 to the standalone financialstatements).
iii. (a) The Company has granted secured or unsecured to one of itssubsidiaries covered in the register maintained under section 189 of the Act. In ouropinion and according to the information and explanations given to us the terms andconditions of the loans are not prejudicial to the Company's interest.
(b) The Company has granted loan re-payable on demand as agreed to acompany covered in the register maintained under Section 189 of the Act. We are informedthat the Company has not demanded repayment of any such loan during the year and thusthere has been no default on the part of the party to whom the money has been lent.
(c) There is no amount of loan granted to company listed in theregister maintained under Section 189 of the Act which is overdue for more than ninetydays.
iv. In our opinion and according to the information and explanationsgiven to us provisions of section 185 and 186 of the Act to the extent applicable inrespect of loans to directors including entities in which they are interested and inrespect of loans and advances given investments made and guarantees and securitiesgiven have been complied with by the Company.
v. (a) During the previous years the Company had filed with CompanyLaw Board (CLB) a scheme for extension of time for repayment of its fixed deposits. CLBhad approved extension of time for repayment of fixed deposits with certain conditionsvide order dated December 30 2014 and April 28 2016 under section 74(2) of the Act. Asper National Company Law Tribunal Order dated January 13 2017 and in response to anapplication filed by the Company as amended/extended from time to time the Company wasrequired to repay Rs. 200 lakh per month (Rs. 100 lakh per month from January 2019onwards) as per revised schedule. As on March 31 2021 an amount of Rs. 3506 Lakh isoverdue on account of what was payable as per schedule. The Company's petition regardingrevised schedule for repayment of deposits and interest thereon is pending before NCLTNext date of hearing is July 20 2021. Further provisions of section 73 to 76 or anyother relevant provisions of the Act whichever is applicable have been complied by theCompany (refer para 'b' &'c' of Emphasis of Matter para of the main independentauditors' report).
(b) Further as per section 73(2) of the Act read with Order ofNational Company Law Tribunal (NCLT) dated 30 April 2014 the Company is required todeposit at least 6% (30% of the 20% amount as mention in deposit rules as amended) of theamount of Public deposits maturing during the following financial years in a schedule bankin a separate bank account as liquid funds and shall not be utilized for any purpose otherthan repayment of Public Deposits. However Hon'ble NCLT vide its order dated 20.02.2020exempted the Company to deposit the said liquid fund exempted with Schedule Bank inseparate account till financial year ended 31.03.2021.
vi. The Central Government has prescribed for maintenance of CostAccounting records pursuant to the requirements of sub-section (1) of section 148 of theAct with regard to the activities of the Company. The Company is in the process of makingand maintaining those records. However we are not required to carry out a detailedexamination of the same.
vii. a. According to the records of the Company examined by us and theinformation and explanations given to us the Company is generally irregular in depositingits undisputed statutory dues including Provident Fund Employees State Insurance Incometax Sales tax duty of custom value added tax cess goods and service tax and othermaterial statutory dues wherever applicable with the appropriate authorities during theyear. There are no such undisputed statutory dues payable for a period of more than sixmonths from the date they became payable as at March 312021 except Tax Deducted at Sourceof Rs. 75.28 Lakh and Work contract tax of Rs. 17.63 Lakh.
b. According to the information and explanations given to us and as perthe books and records examined by us details of dues of income tax sales tax valueadded tax service tax goods and service tax (GST) duty of customs duty of excise whichhave not been deposited with the appropriate authorities on account of any dispute and theforum where the dispute is pending are as under:
|Name of the statute ||Nature of dues ||Amount in Rs. (Lakh) ||Assessment Year ||Forum where the dispute is pending |
|Sales Tax Act ||Delhi Sales Tax ||447 ||1999-2000 ||Assessing Authority Special Zone Delhi |
|Sales Tax Act ||UP Sales Tax ||15.68 ||2013-14 ||Commercial Tax Tribunal Range-II Ghaziabad |
|Sales Tax Act ||UP Sales Tax ||32.37 ||2014-15 ||Commercial Tax Tribunal Range-II Ghaziabad |
|Sales Tax Act ||UP Sales Tax ||25.28 ||2015-16 ||Additional commissioner Ghaziabad |
|Sales Tax Act ||UP Sales Tax ||24.76 ||2016-17 ||Additional commissioner Ghaziabad |
|Sales Tax Act ||UP Sales Tax ||484 ||2017-18 ||Dy. Commissioner Ghaziabad |
|Sales Tax Act ||Haryana sale tax ||3.16 ||2017-18 ||Assessing Authority Gurugram |
|Local Area Development Tax Act ||Local Area Development Tax ||8.73 ||2003-2004 ||Joint Excise & Taxation Commissioner (Appeal) Gurgaon |
|Income Tax Act 1961 ||Income Tax ||230.59 ||2007-08 ||Commissioner of Income Tax (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax ||2421.21 ||2010-2011 ||Commissioner of Income Tax New Delhi |
|Income Tax Act 1961 ||Income Tax ||506.17 ||2011-2012 ||ITAT New Delhi |
|Income Tax Act 1961 ||Income Tax ||248.56 ||2012-2013 ||ITAT New Delhi |
|Income Tax Act 1961 ||Income Tax ||165.77 ||2013-2014 ||ITAT New Delhi |
|Income Tax Act 1961 ||Income Tax ||2480.00 ||1988-1989 to 2014-2015 ||Supreme Court |
|Income Tax Act 1961 ||Income Tax ||340.04 ||2014-2015 ||ITAT New Delhi |
|Income Tax Act 1961 ||Income Tax ||1304.20 ||2015-16 ||ITAT New Delhi |
|Income Tax Act 1961 ||Income Tax ||1403.15 ||2016-17 ||Commissioner of Income Tax (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax ||1313.38 ||2017-18 ||Commissioner of Income Tax (Appeals) New Delhi |
|Income Tax Act 1961 ||Income Tax ||71.86 ||2018-19 ||Commissioner of Income Tax (Appeals) New Delhi |
|Finance Act 1994 ||Service tax demand on corporate guarantee commission ||1008.64 ||2017 ||Principal Commissioner of Central Goods and Services Tax |
viii. On the basis of the audit procedures performed by us theinformation & explanations furnished and representations made by the management theCompany has made defaults in repayment of dues including interest to banks and financialinstitutions. The defaults which have remained outstanding at the year-end are given inAnnexure attached with this report. There are no outstanding debentures at year end andthe Company has not taken any loan from government.
ix. In our opinion and according to the information and explanationsgiven to us the Company has not raised any money by way of initial public offer / furtherpublic offer during the year. Further no term loans raised during the year by theCompany.
x. In our opinion and according to the information and explanationsgiven to us we report that no fraud by the Company or on the Company by the officers andemployees of the Company has been noticed or reported during the year.
xi. In our opinion and according to the information and explanationsgiven to us Company is complied with the provisions of section 197 of the Act read withSchedule V to the Act.
xii. The Company is not a Nidhi Company. Therefore the provisions ofclause 3(xii) of the Order are not applicable to the Company.
xiii. In our opinion and according to the information and explanationsgiven to us during the course of audit transactions with the related parties are incompliance with section 177 and section 188 of the Act where applicable and the detailshave been disclosed in the notes to the standalone financial statements as required bythe applicable Indian Accounting Standards.
xiv. According to the information and explanations given to us and onan overall examination of the books of account the Company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under audit and hence not commented upon.
xv. In our opinion and according to the information and explanationsgiven to us the Company has not entered into any non-cash transactions with directors orpersons connected with him as referred to in Section 192 of the Act.
xvi. According to the information and explanations given to us theprovisions of section 45-IA of the Reserve Bank of India Act 1934 are not applicable tothe Company.
Annexure 2 to the Independent Auditor's Report to the Members of AnsalProperties & Infrastructure Limited dated June 29 2021
Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act") as referredto in paragraph 2(f) of Report on Other Legal and Regulatory Requirements' section
We have audited the internal financial controls over financialreporting of Ansal Properties & Infrastructure Limited ("theCompany") as of March 312021 in conjunction with our audit of the standalonefinancial 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 andmaintaining internal financial controls based on "the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting issued by the Institute of Chartered Accountants of India". 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 company's policies the safeguarding ofits assets the prevention and detection of frauds and errors the accuracy andcompleteness of the accounting records and the timely preparation of reliable financialinformation as required under the Act.
Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting based on our audit.
We conducted our audit in accordance with the Guidance Note on Audit ofInternal Financial Controls Over Financial Reporting (the "Guidance Note") andthe Standards on Auditing issued by ICAI and deemed to be prescribed under section143(10) of the Act to the extent applicable to an audit of internal financial controlsboth applicable to an audit of Internal Financial Controls and both issued by theInstitute of Chartered Accountants of India. Those Standards and the Guidance Note requirethat we comply with ethical requirements and plan and perform the audit to obtainreasonable assurance about whether adequate internal financial controls over financialreporting was established and maintained and if such controls operated effectively in allmaterial respects.
Our audit involves performing procedures to obtain audit evidence aboutthe adequacy 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 auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the Company's internal financialcontrols system over financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that:
a) pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;
b) provide reasonable assurance that transactions are recorded asnecessary to permit preparation of financial statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorizations of management and directors of thecompany; and
c) provide reasonable assurance regarding prevention or timelydetection of unauthorized acquisition use or disposition of the company's assets thatcould have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over FinancialReporting
Because of the inherent limitations of internal financial controls overfinancial reporting including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls overfinancial reporting to future periods are subject to the risk that the internal financialcontrol over financial reporting may become inadequate because of changes in conditionsor that the degree of compliance with the policies or procedures may deteriorate.
According to the information and explanations given to us and based onour audit the following material weakness has been identified in the operatingeffectiveness of the Company's internal financial controls over financial reporting withreference to these standalone financial statements during the current financial year:
The Company's internal financial control in respect of regularassessment of claims filed by the customers against the Company regular complianceverification of the Real Estate (Regulation and Development) Act (RERA) of differentStates Payment of statutory dues in timely manner such as TDS GST RERA dues etc. andthe Information Technology General Controls in relation to this for the purpose ofmanagement information system (MIS) were not operating effectively and needs to bestrengthened.
Hence our opinion is qualified on adequacy of internal financialcontrols over financial reporting in respect of matters stated above.
A 'material weakness' is a deficiency or a combination ofdeficiencies in internal financial control over financial reporting such that there is areasonable possibility that a material misstatement of the company's annual or interimfinancial statements will not be prevented or detected on a timely basis.
In our opinion the Company has in all material respects maintainedadequate internal financial controls over financial reporting with reference to thesestandalone financial statements as of March 31 2021 based on the internal control overfinancial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia and except for the possible effects of the material weakness described above on theachievement of the objectives of the control criteria the Company's internal financialcontrols over financial reporting with reference to these standalone financial statementswere operating effectively as of March 31 2021.
We also have audited in accordance with the Standards on Auditingissued by the Institute of Chartered Accountants of India as specified under Section143(10) of the Act the standalone financial statements of the Company which comprise thebalance sheet as at March 31 2021 and the statement of profit and loss including othercomprehensive income cash flow statement & statement of changes in equity for theyear then ended and a summary of significant accounting policies and other explanatoryinformation. This material weakness was considered in determining the nature timing andextent of audit tests applied in our audit of the March 31 2021 standalone financialstatements of the Company and this report does not affect our report dated June 29 2021which expressed a qualified opinion on those standalone financial statements.
|MRKS & Associates |
|ICAI Firm registration number: 023711N |
|Chartered Accountants |
|Saurabh Kuchhal |
|Membership No: - 512362 |
|Date: 29.06.2021 |
|Place: New Delhi |
|UDIN: 21512362AAAAFN8083 |