TO THE MEMBERS OF ARIHANT FOUNDATIONS AND HOUSING LIMITED
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Arihant Foundationsand Housing Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2019 the Statement of Profit and Loss (including Other Comprehensive Income)the Statement of Changes in Equity and the Statement of Cash Flows for the yearendedonthatdateand significantaccounting policies and other summaryofthe explanatoryinformation (hereinafter referred to as "the standalone financial statements").
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 the profit and totalcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the standalone financial statements in accordance with theStandards on Auditing specified under section 143(10) of the Act (SAs). Ourresponsibilities 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 issued bythe Institute of Chartered Accountants of India (ICAI) together with the independencerequirements that are relevant to our audit of the standalone financial statements underthe provisions of the Act and the Rules made there-under and we have fulfilled our otherethical responsibilities in accordance with these requirements and the ICAI'sCode ofEthics. We believe that the audit evidence we have obtained is sufficient and appropriateto provide a basis for our audit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters. We have determined the matters described below to bethe key audit matters to be communicated in our report.
|Sr.No ||Key Audit Matter ||Auditor's Respons |
|1. ||Recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 "Revenue from Contracts with customers" ||Key audit matter description |
| ||(new revenue accounting standard) ||The application of new revenue standard involves certain key judgements relating to identification of distinct performance obligations determination of transaction price of the identified performance obligations the appropriateness of the basis used to measure revenue recognised over a period. |
| || ||Refer Note No: 2(g) to Standalone financial statements. |
| || ||Principal Audit Procedures |
| || ||We assessed the Company's process to identify the impact of adoption of the new revenue accounting standard. Our audit approach is as follows: |
| || || Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness. |
| || || Testing the relevant information technology system's access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new accounting standard. |
| || || Testing a sample of contracts for appropriate identification of performance obligations; |
| || || Engaging technical experts to review estimates of costs to complete for sample contracts and |
| || || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings. |
|2. ||Evaluation of uncertain tax positions ||Key audit matter description |
| || ||The company has material uncertain tax positions including matters under dispute which involves significant judgement to determine the possible outcome of these disputes |
| || ||Refer Note no: 2(o) & (p) to Standalone Financial Statements. |
| || ||Principal Audit Procedures |
| || ||Our procedures included the following : |
| || || Obtained understanding of key uncertain tax positions. |
| || || Obtained details of completed tax assessments and demands for the year ended March 31 2019 from the management; |
| || || We along with our internal tax experts discussed with appropriated senior management and evaluated the Management's underlying key assumptions in estimating the tax provision. |
| || || Additionally we considered the effect of new information in respect to uncertain tax positions as at April 01 2018 to evaluate whether any change was required to management's position on these uncertainties. |
Information Other than the Standalone Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the preparation of the otherinformation. The other information comprises the information included in the ManagementDiscussion and Analysis Board's Report including Annexures to Board's Report BusinessResponsibility Report Corporate Governance and Shareholder's Information but does notinclude the standalone financial statements and our auditor's report thereon. Our opinionon the standalone financial statements does not cover the other information and we do notexpress any form of assurance conclusion thereon. In connection with our audit of thestandalone financial statements our responsibility is to read the other information andin doing so consider whether the other information is materially inconsistent with thestandalone financial statements or our knowledge obtained during the course of our auditor otherwise appears to be materially misstated. If based on the work we have performedwe conclude that there is a material misstatement of this other information we arerequired to report that fact. We have nothing to report in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Act with respect to the preparation of these standalone financial statementsthat give a true and fair of the financial position financial performance comprehensiveincome changes in equity and cash flows of the Company in accordance with the Ind AS andother accounting principles generally accepted in India. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding the assets of the Company and for preventing and detecting frauds andother irregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
The Board of Directors are responsible for overseeing the Company'sfinancialreporting .process
Auditor's Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these standalone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the standalonefinancial statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal financial controls relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Under section143(3)(i) in internal 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 the reasonablenessof accounting estimates and related disclosures made by management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant continue as a goingconcern. If we conclude that a material uncertainty exists we are required to drawattention in our auditor's report to the related disclosures in the standalone financialstatements or if such disclosures are inadequate to modify our opinion. Our conclusionsare based on the audit evidence obtained up to the date of our auditor's report. Howeverfuture events or conditions may cause the Company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the standalone financial statementsthat individually in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. quantitativemateriality and qualitative factors in (i) planning the scope of our audit work and inevaluating the results of our work; and (ii) to evaluate the effect of any identifiedmisstatements in the financial statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant including any significant controlthat we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by Section 143(3) of the Act based on our audit 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 or so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome Statement of Changes in Equity and the Statement of Cash Flow dealt with by thisReport are in agreement with the relevant books of account.
d) In our opinion the aforesaid standalone financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
e) On the basis of the written representations received from the directors as on March31 2019 taken on record by the Board of Directors none of the directors is disqualifiedas on March 2019 from being appointed as a director in terms of Section 164 (2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure A". Our report expresses an unmodifiedopinion on the adequacy and operating effectiveness of the Company's internal financialcontrols over financial reporting.
g) With respect to the other matters to be included in the Auditor's Report inaccordance with the requirements of section 197(16) of the Act as amended: In our opinionand to the best of our information and according to the explanations given to us theremuneration paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 as amended inour opinion and to the best of our information and according to the explanations given tous:
i. The Company has disclosed the impact of pending litigations on its financialposition in its standalone financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of Section 143(11) of the Act we give in"Annexure B" a statement on the matters specified in paragraphs 3 and 4 of theOrder.
ANNEXURE "A" TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 1(f) under Report on Other Legal and RegulatoryRequirements' section of our report to the Members of Arihant Foundations and HousingLimited of even date)
Report on the Internal Financial Controls over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of ARIHANTFOUNDATIONS AND HOUSING LIMITED ("the Company") as of March 31 2019 inconjunction with our audit of the standalone financial statements of the Company for theyear ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancialcontrols 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 responsibilitiesinclude the design implementation and maintenance of adequate internal financial controlsthat were operating effectively for ensuring the orderly and efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate 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 their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgement including the assessment of the risks ofmaterial misstatement of the financial statements whether due to fraud or error.
We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that
i. Pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
ii. 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
iii. 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.
Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal financial controls over financialreporting to future periods are subject to the risk that the internal financial controlover financial reporting may become inadequate because of changes in conditions or thatthe degree of compliance with the policies or procedures may deteriorate.
In our opinion to the best of our information and according to the explanations givento us the Company has in all material respects an adequate internal financial controlssystem over financial reporting and such internal financial controls over financialreporting were operating effectively as at March 31 2019 based on the internal controlover financial reporting criteria established by the Company considering the essentialcomponents of internal control stated in the Guidance Note on Audit of Internal FinancialControls Over Financial Reporting issued by the Institute of Chartered Accountants ofIndia".
"ANNEXURE B' TO THE INDEPENDENT AUDITOR'S REPORT
(Referred to in paragraph 2 under Report on Other Legal & RegulatoryRequirement' of our report to the Members of Arihant Foundations and Housing Limited ofeven date)
1. In respect of the Company's fixed assets :
a. The company has maintaining proper records showing full particulars includingquantitative details and situation of fixed assets.
b. The Company has a program of verification to cover all the items of fixed assets ina phased manner which in our opinion is reasonable having regard to the size of theCompany and the nature of its assets. Pursuant to the program certain fixed assets werephysically verified by the management during the year. According to the information andexplanations given to us no material discrepancies were noticed on such verification.
c. According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds provided to us we report thatthe title deeds comprising all the immovable properties of land and buildings which arefreehold are held in the name of the Company as at the balance sheet date.
2. As explained to us the stock of construction materials has been physically verifiedby the management at reasonable intervals; and no material discrepancies were noticed onsuch verification and if so and the same have been properly dealt with in the books ofaccount.
3. According to the information and explanations given to us the Company has grantedunsecured loans to four body corporates covered in the register maintained under section189 of the Companies Act 2013 in respect of which:
a. In our opinion the rate of interest and other terms and conditions on which theloans had been granted to the body corporates listed in the register maintained underSection 189 of the Act were not prima facie prejudicial to the interest of the company.
b. During the year in respect of the aforesaid loans in some of the loans there hasbeen no recovery towards principal. In absence of any terms we are unable to comment onthe regularity of recovery of principal amount.
c. Since there was no repayment schedules we are unable to comment whether the amountwas overdue for more than ninety days.
4. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and I86 of the Ac in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
5. The Company has not accepted deposits during the year and does not have anyunclaimed deposits as at March 31 2019 and therefore the provisions of the clause 3 (v)of the Order are not applicable to the Company.
6.The maintenance of cost records has been specified by the Central Government undersection 148 (1) of the Companies Act 2013. We have broadly reviewed the cost recordsmaintained by the company pursuant to the Companies (Cost Records and Audit) Rules 2014as amended and prescribed by the Central government under sub-section (1) of Section 148of the Act and are of the opinion thatprima facie the prescribed cost records have beenmade and maintained by the company. We have however not made a detailedexamination ofthe cost records with a view to determine whether they are accurate or complete.
7. According to the information and explanations given to us in respect of statutorydues:
(a). The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Sales Tax Service TaxGoods and Service Tax Value Added Tax duty of Customs duty Excise Duty Cess and anyother material statutory dues applicable to it with the appropriate authorities except oncertain occasions irregularities were noticed.
(b). There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Sales Tax Service Tax Value Added Tax Goods and ServiceTax Customs Duty Excise Duty Cess and other material statutory dues in arrears as atMarch 31 2019 for a period of more than six months from the date they became payable.
(c) Details of dues of Income Tax Service tax which have not been deposited as atMarch 31 2019 on account of dispute are given below:
|Name of the statute ||Nature of the dues ||Forum where dispute is pending ||Period to which the amount relates ||Amount (Rs.) |
|The Income Tax Act1961 ||Income Tax ||Appellate Authority upto Commissioner's level ||A.Y. 1999-2000 ||7638692 |
|The Income Tax Act1961 ||Income Tax ||Appellate Authority upto Commissioner's level ||A.Y. 2011-12 ||7183310 |
|The Income Tax Act1961 ||Income Tax ||High Court of Madras ||A.Y. 2004-05 ||1371638 |
|The Income Tax Act1961 ||Income Tax ||High Court of Madras ||A.Y. 2005-06 ||5323956 |
|The Income Tax Act1961 ||Income Tax ||High Court of Madras ||A.Y. 2005-06 ||9558275 |
|The Income Tax Act1961 ||Income Tax ||High Court of Madras ||A.Y. 2007-08 ||55761612 |
|Finance Act 1994 ||Service Tax ||CESTAT Chennai ||June-2005 to March 2007. ||2316081 |
8. The Company has not defaulted in repayment of loans to banks financialinstitutions government and to debenture holders.
9. The Company has not raised moneys by way of initial public offer or further publicoffer (including debt instruments) or term loans and hence reporting under clause 3 (ix)of the Order is not applicable to the Company.
10. To the best of our knowledge and according to the information and explanationsgiven to us no fraud by the Company or no material fraud on the Company by its officersor employees has been noticed or reported during the year.
11. In our opinion and according to the information and explanations given to us theCompany has paid/ provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
12. The Company is not a Nidhi Company and hence reporting under clause 3(xii) of theOrder is not applicable to the Company.
13. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone financial statements as required by theapplicable accounting standards.
14. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
15. 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 to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
16. The Company is not required to be registered under Section 45-IA of the ReserveBank of India Act 1934.
| ||For S RAMACHANDRA RAO & ASSOCIATES |
| ||Chartered Accountants |
| ||Firm's Registration No.007735S |
|Place: Chennai ||RAMACHANDRA RAO SURANENI |
|Date : 30-05-2019 ||Proprietor |
| ||(Membership No: 206003). |