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Arihant Superstructures Ltd.

BSE: 506194 Sector: Infrastructure
NSE: ARIHANTSUP ISIN Code: INE643K01018
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VOLUME 22
52-Week high 32.75
52-Week low 16.50
P/E
Mkt Cap.(Rs cr) 86
Buy Price 19.75
Buy Qty 50.00
Sell Price 20.95
Sell Qty 225.00
OPEN 20.95
CLOSE 20.00
VOLUME 22
52-Week high 32.75
52-Week low 16.50
P/E
Mkt Cap.(Rs cr) 86
Buy Price 19.75
Buy Qty 50.00
Sell Price 20.95
Sell Qty 225.00

Arihant Superstructures Ltd. (ARIHANTSUP) - Auditors Report

Company auditors report

To the Members of Arihant Superstructure LimitedReport on the Audit of the Standalone Financial Statements

Opinion

We have audited the standalone financial statements of ArihantSuperstructure Limited (“the Company”) which comprise the standalone balancesheet as at 31 March 2020 the standalone statement of profit and loss (including othercomprehensive income) the standalone statement of changes in equity and the standalonestatement of cash flows for the year then ended and notes to the standalone financialstatements including a summary of the significant accounting policies and otherexplanatory information.

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone financial statements give theinformation 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 31 March 2020its loss and other comprehensive income changes in equity and its cash flows for the yearended on that date.

Basis for Opinion

We conducted our audit in accordance with the Standards on Auditing(SAs) specified under Section 143 (10) of the Act. Our responsibilities under those SAsare further described in the Auditors' Responsibilities for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Act and the Rules thereunderand we have fulfilled our other ethical responsibilities in accordance with theserequirements and the Code of Ethics. We believe that the audit evidence we have obtainedis sufficient and appropriate to provide a basis for our opinion.

Key Audit Matter

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone financial statements of thecurrent period. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matter.

Revenue recognition

The Key Audit Matter How the matter was addressed in our audit
Revenue from sale of residential and commercial units represents 98.30% of the total revenue from operations of the Company. Our audit procedures on Revenue recognition included the following:
• Evaluating that the Company's revenue recognition accounting policies are in line with the applicable accounting standards and their application to the key customer contracts including consistent application;
Revenue is recognised upon transfer of control of residential and commercial units to customers for an amount that reflects the consideration which the Company expects to receive in exchange for those units. The trigger for revenue recognition is normally percentage of completion of the project
• Scrutinising all the revenue journal entries raised throughout the reporting period and comparing details of a sample of these journals which met certain risk-based criteria with relevant underlying documentation'
Accuracy of recognition measurement presentation and disclosures of revenues and other related balances in view of adoption of Ind AS 115 “Revenue from Contracts with Customers”
• Conducting site visits during the year for selected projects to understand the scope and nature of the projects and to assess the progress of the projects; and
The application of the new revenue accounting standard involves significant estimates related to measurement of costs to complete for the projects. Revenue from projects is recorded based on management's assessment of the work completed costs incurred and accrued and the estimate of the balance costs to complete.
• Testing sample sales of units for projects with the underlying contracts completion status and proceeds received from customers;
The application of the new revenue accounting standard involves significant estimates related to measurement of costs to complete for the projects. Revenue from projects is recorded based on management's assessment of the work completed costs incurred and accrued and the estimate of the balance costs to complete. • Identified and tested operating effectiveness of key controls around approvals of contracts milestone billing intimation of possession letters / intimation of receipt of occupation certificate and controls over collection from customers.
Measurement of revenue recorded over time which is dependent on the estimates of the costs to complete
Due to the inherent nature of the projects and significant judgment involved in the estimate of costs to complete there is risk of overstatement or understatement of revenue
• Compared on a sample basis revenue transactions recorded during the year with the underlying contracts progress reports invoices raised on customers and collections in bank accounts and whether the related revenue had been recognised in accordance with the Company's revenue recognition policies;
• Identification and testing operating effectiveness of key controls over recording of actual costs incurred for the projects;
• Read analysed and identified the distinct performance obligations in these contracts.
• Performed analytical procedures for reasonableness of revenues disclosed by the company.
• Verification of construction cost and land cost directly attributable to the project.

Other Information

The Company's Management and Board of Directors are responsiblefor the other information. The other information comprises the information included in theCompany's annual report but does not include the standalone financial statements andour auditors' report thereon.

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 financial statements ourresponsibility is to read the other information identified above when it becomes availableand in doing so consider whether the other information is materially inconsistent withthe financial statements or our knowledge obtained in the audit or otherwise appears tobe materially misstated if based on the work we performed 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 Financial Statements

The company's Board of Directors is responsible for the mattersstated in section 134(5) of the Act with respect to the preparation of these financialstatements that give a true and fair view of the state of affairs (financial position)profit or loss (financial performance including Other Comprehensive Income) Changes InEquity and Cash Flows of the company in accordance with the accounting principlesgenerally accepted in India including the Ind AS specified under section 133 of the Act.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate implementation and maintenance of accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the financial statements that give a true and fair view and are free frommaterial misstatement whether due to fraud or error.

In preparing the financial statements the Board of Directors 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 the Board of Directors either intends to liquidate the companyor to cease operations or has no realistic alternative but to do so.

Board of Directors are also responsible for overseeing thecompany's financial reporting process.

Auditor's Responsibilities for the Audit of Financial Statements

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 auditors' 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 itexists. Misstatements can arise from fraud or error and are considered material ifindividually or in the aggregate they could reasonably be expected to influence theeconomic decisions of users taken on the basis 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 with reference to financialstatements in place and the operating 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 thegoing concern basis of accounting and based on the audit evidence obtained whether amaterial uncertainty exists related to events or conditions that may cast significantdoubt on the Company's ability to continue as a going concern. If we conclude that amaterial uncertainty exists we are required to draw attention in our auditor'sreport to the related disclosures in the standalone financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditor's report. However future events orconditions may cause the Company to 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 of the current period and are therefore the key audit matters. Wedescribe these matters in our auditors' report unless law or regulation precludespublic disclosure about the matter or when in extremely rare circumstances we determinethat a matter should not be communicated in our report because the adverse consequences ofdoing so would reasonably be expected to outweigh the public interest benefits of suchcommunication.

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 Section 143(11) of the Act we give in the “Annexure A” a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable

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

(a) We have sought and obtained all the information and explanationswhich to the best of our knowledge and belief were necessary for the purposes of ouraudit;

(b) In our opinion proper books of account as required by law havebeen kept by the Company so far as it appears from our examination of those books;

(c) The standalone balance sheet the standalone statement of profitand loss (including other comprehensive income) the standalone statement of changes inequity and the standalone statement of cash flows dealt with by this report are inagreement with the books of account

(d) In our opinion the aforesaid standalone financial statementscomply with the Indian Accounting Standards (Ind AS) specified under Section 133 of theAct

(e) On the basis of the written representations received from thedirectors as on 31 March 2020 taken on record by the Board of Directors none of thedirectors is disqualified as on 31 March 2020 from being appointed as a director in termsof Section 164 (2) of the Act; and

(f) With respect to the adequacy of the internal financial controlswith reference to the standalone financial statements of the Company and the operatingeffectiveness of such controls refer to our separate Report in “Annexure B”.

(g) With respect to the other matters to be included in theAuditor's Report in accordance with the requirements of section 197(16) of the Actas amended:

In our opinion and to the best of our information and according to theexplanations given to us the remuneration paid by the company to its directors during theyear is in accordance with the provisions of section 197 of the Act

(h) with respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors)Rules 2014 as amended in our opinion and to the best of our information and accordingto the explanations given to us:

i. The company has to the extent ascertainable disclosed the impactof pending litigations on its financial position in its financial statements - Refer Note12 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. The company is required to transfer Rs. 1492.20 to InvestorEducation and Protection Fund by the Company

For Kailash Chand Jain & Co.
Chartered Accountants
Firm Registration No.: 112318W
Saurabh Chouhan
Partner
Place : Navi Munbai Membership No.: 167453
Date : June 27 2020 UDIN : 20167453AAAAFD9264

Annexure - A to the Independent Auditors'Report

The Annexure referred to in Independent Auditors' Report to themembers of the Company on the standalone financial statements

for the year ended March 31 2020 we report that:

(i) (a) The Company has maintained proper records showing fullparticulars including quantitative details and situation of

Property Plant and Equipment and Investment properties.

(b) The Fixed assets of the company have been physically verified bythe management during the year and no material discrepancies have been identified on suchverification. In our opinion the frequency of verification is reasonable.

(c) According to the information and explanations given to us and onthe basis of our examination of the records of the Company the title deeds of immovableproperties as disclosed in note no 5 are in process of transfer.

(ii) The company inventory includes construction work in progressaccordingly the requirement under paragraph 3 (ii) of the Order is not applicable forconstruction work in progress. The Inventory comprising of finished goods has beenphysically verified by the management during the year. In our opinion the frequency ofsuch verification is reasonable. No discrepancies were noticed on verification between thephysical stocks and the books records.

(iii) The Company has granted loans to body corporate covered in theregister maintained under section 189 of the Companies Act 2013 (‘the Act').

(a) In our opinion the rate of interest and other terms and conditionson which the loans had been granted to the bodies corporate listed in the registermaintained under Section 189 of the Act were not prima facie prejudicial to the interestof the Company.

(b) In the case of the loans granted to the bodies corporate listed inthe register maintained under section 189 of the Act the borrowers have been regular inthe payment of the principal and interest as stipulated.

(c) In respect to the aforesaid loan granted whether the amount(Principal as well interest) has been repaid/ paid regularly or not cannot be commentedupon as there is no stipulation as regards to the repayment of the amount.

(iv) In our opinion and according to the information and explanationsgiven to us the Company has complied with the provisions of section 185 and 186 of theAct with respect to the loans and investments made and guarantees and securitiesprovided by it.

(v) The Company has not accepted any deposits from the public withinthe meaning of Sections 73 74 75 and 76 of the Act and the Rules framed there under tothe extent notified.

(vi) We have broadly reviewed the books of accounts maintained by theCompany pursuant to the rules prescribed by the Central Government for the maintenance ofcost records under Section 148(1) of the Act and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. However we have not made adetailed examination of the records.

(vii) (a) According to the information and explanations given to us andthe records of the Company examined by us in our opinion the Company is generallyregular in depositing undisputed statutory dues in respect of provident fund income taxsales tax value added tax duty of customs service tax goods and service tax cess andother material statutory dues though there has been a slight delay in few cases with theappropriate authorities.

According to the information and explanations given to us noundisputed amounts payable in respect of provident fund income tax sales tax valueadded tax duty of customs service tax goods and service tax cess and other materialstatutory dues were in arrears as at March 31 2020 for a period of more than six monthsfrom the date they became payable except as stated below.

Name of the statue Nature of dues Amount (Rs. In Lakhs) Period to which the amount relates Forum where the dispute is pending
Income Tax Act 1961 Income Tax Penalty 0.63 AY 2010-11 CIT (Appeal)
2.36 AY 2011-12
0.40 AY 2012-13

(viii) According to the information and explanation given to us andbased on our examination of the records the company has not defaulted in the repayment ofloans or borrowing to any financial institutions banks governments and debenture holdersas at balance sheet date.

(ix) In our opinion and according to information and explanation givento us the money raised by way of term loan has been applied on an overall basis for thepurpose for which they were obtained.

(x) During the course of our examination of the books and records ofthe Company carried out in accordance with the generally accepted auditing practices inIndia and according to the information and explanations given to us we have neither comeacross any instance of material fraud by the Company or on the Company by its officers oremployees noticed or reported during the year nor have we been informed of any such caseby the Management.

(xi) According to the information and explanations give to us and basedon our examination of the records of the Company the Company has paid for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with Schedule V to the Act.

(xii) In our opinion and according to the information and explanationsgiven to us the Company is not a nidhi company. Accordingly paragraph 3(xii) of theOrder is not applicable.

(xiii) According to the information and explanations given to us andbased on our examination of the records of the Company transactions with the relatedparties are in compliance with sections 177 and 188 of the Act where applicable anddetails of such transactions have been disclosed in the Standalone Ind AS FinancialStatements as required by the applicable accounting standards.

(xiv) According to the information and explanations give to us andbased on our examination of the records of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the year. Accordingly paragraph 3(xiv) of the order is not applicable.

(xv) According to the information and explanations given to us andbased on our examination of the records of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Accordingly paragraph3(xv) of the Order is not applicable.

(xvi) The Company is not required to be registered under section 45-IAof the Reserve Bank of India Act 1934.

For Kailash Chand Jain & Co.
Chartered Accountants
Firm Registration No. : 112318W
Saurabh Chouhan
Partner
Place: Navi Mumbai Membership No. : 167453
Date: June 27 2020 UDIN: 20167453AAAAFD9264

Annexure - B to the Independent Auditors'Report of even date on the Standalone financial statements of Arihant SuperstructureLimited.

Referred to in Paragraph 2 (f) of ‘Report on Other Legal andRegulatory Requirements' section of our Report of even date.

Report on the Internal Financial Controls under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (“the Act”)

We have audited the internal financial controls over financialreporting of Arihant Superstructure Limited (“the Company”) as of March31 2020 in conjunction with our audit of the standalone financial statements of theCompany 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(‘ICAI'). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence tocompany's policies the safeguarding of its assets the prevention and detection offrauds and errors the accuracy and completeness of the accounting records and the timelypreparation of reliable financial information as required under the Companies Act 2013.

Auditors' Responsibility

Our responsibility is to express an opinion on the Company'sinternal financial controls over financial reporting based on our audit. We conducted ouraudit in accordance with the Guidance Note on Audit of Internal Financial Controls overFinancial Reporting (the “Guidance Note”) and the Standards on Auditing issuedby ICAI and deemed to be prescribed under section 143(10) of the Companies Act 2013 tothe extent applicable to an audit of internal financial controls both applicable to anaudit of Internal Financial Controls and 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 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 judgment 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 internalfinancial controls system over financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting isa process 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 controlover financial reporting includes those policies and procedures that

(1) Pertain to the maintenance of records that in reasonable detailaccurately and fairly reflect the transactions and dispositions of the assets of thecompany;

(2) 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 authorisations of management and directors of thecompany; and

(3) Provide reasonable assurance regarding prevention or timelydetection of unauthorised acquisition use or disposition of the company's assetsthat could 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.

Opinion

In our opinion the Company has in all material respects an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at March 31 2020 based onthe internal control over financial reporting criteria established by the Companyconsidering 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.

For Kailash Chand Jain & Co.
Chartered Accountants
Firm Registration No. : 112318W
Saurabh Chouhan
Partner
Place: Navi Mumbai Membership No. : 167453
Date: June 27 2020 UDIN: 20167453AAAAFD9264

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