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Arvind SmartSpaces Ltd.

BSE: 539301 Sector: Infrastructure
NSE: ARVSMART ISIN Code: INE034S01021
BSE 00:00 | 30 Jul 130.20 -3.55
(-2.65%)
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133.20

HIGH

135.55

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128.85

NSE 00:00 | 30 Jul 130.20 -4.10
(-3.05%)
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133.95

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135.75

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OPEN 133.20
PREVIOUS CLOSE 133.75
VOLUME 10574
52-Week high 141.25
52-Week low 76.95
P/E 33.13
Mkt Cap.(Rs cr) 463
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00
OPEN 133.20
CLOSE 133.75
VOLUME 10574
52-Week high 141.25
52-Week low 76.95
P/E 33.13
Mkt Cap.(Rs cr) 463
Buy Price 0.00
Buy Qty 0.00
Sell Price 0.00
Sell Qty 0.00

Arvind SmartSpaces Ltd. (ARVSMART) - Auditors Report

Company auditors report

To the Members of Arvind SmartSpaces Limited

Report on the Audit of the Standalone Ind AS Financial Statements

Opinion

We have audited the accompanying standalone Ind AS financial statementsof Arvind SmartSpaces Limited ("the Company") which comprise the Balance sheetas at March 31 2020 the Statement of Profit and Loss including the statement of OtherComprehensive Income the Cash Flow Statement and the Statement of Changes in Equity forthe year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information (hereinafter referred toas "the standalone Ind AS financial statements").

In our opinion and to the best of our information and according to theexplanations given to us the aforesaid standalone Ind AS financial statements give theinformation required by the Companies Act 2013 as amended ("the Act") in themanner so required and give a true and fair view in conformity with the accountingprinciples generally accepted in India of the state of affairs of the Company as at March31 2020 its profit including other comprehensive income its cash flows and the changesin equity for the year ended on that date.

Basis for Opinion

We conducted our audit of the standalone Ind AS 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 Ind AS Financial Statements' section ofour report. We are independent of the Company in accordance with the 'Code of Ethics'issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our audit opinion on the standalone Ind AS financial statements.

Emphasis of Matter

We draw attention to Note 40 of the accompanying Standalone Ind ASfinancial statements as regards the management's evaluation of COVID-I9 impact on theoperations and assets of the Company. Our opinion is not modified in respect of thismatter.

Key Audit Matters

Key audit matters are those matters that in our professional judgmentwere of most significance in our audit of the standalone Ind AS financial statements forthe financial year ended March 31 2020. These matters were addressed in the context ofour audit of the standalone Ind AS

financial statements as a whole and in forming our opinion thereonand we do not provide a separate opinion on these matters. For each matter below ourdescription 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 Ind AS financialstatements section of our report including in relation to these matters. Accordingly ouraudit included the performance of procedures designed to respond to our assessment of therisks of material misstatement of the standalone Ind AS financial statements. The resultsof our audit procedures including the procedures performed to address the matters belowprovide the basis for our audit opinion on the accompanying standalone Ind AS financialstatements.

Key audit matters How our audit addressed the key audit matter
(a) Revenue from Contract with Customers (Refer note 2.2 of the standalone Ind AS financial statements)
In accordance with the requirements of Ind AS 115 Company's revenue from real estate projects is recognized at a point in time which is upon the Company satisfying its performance obligation and the customer obtaining control of the promised asset. As part of our audit procedures:
- We obtained and understood management process and controls around transfer of control in case of real estate projects and tested the relevant controls over revenue recognition at a point in time.
Application of Ind AS 115 requires significant judgment in determining when 'control' of the property underlying the performance obligation is transferred to the customer and in assessment of whether the contracts with customers involved any financing element. - We assessed the management evaluation of whether the contracts with customers involved any financing element taking in to account the consideration received in accordance with the terms of the contract.
As the revenue recognition involves significant judgement we regard this as a key audit matter. - We performed test of details on a sample basis and inspected the underlying customer contracts sale deed documents evidencing the satisfaction of performance obligation and the transfer of control of the property based on which revenue is recognized at a point in time.
- We performed cut off procedures for determination of revenue in appropriate reporting period.
- We assessed the disclosures made in the standalone Ind AS financial statements.
Assessing the carrying value of Inventory (Refer note 2.2 of the standalone Ind AS financial statements)
As at March 31 2020 the carrying value of the inventory of ongoing and completed real estate projects is Rs.23186.30 lacs. The inventories are held at the lower of the cost and net realizable value. As part of our audit procedures our procedures included the following:
- Obtained an understanding of the management process for determination of the Net realizable value (NRV) including estimating the future costs to completion for stock of ongoing projects
We identified the assessment of whether carrying value of inventory were stated at the lower of cost and net realizable value ("NRV") as a key audit matter due to the significance of the balance to the standalone Ind AS financial statements as a whole involvement of estimations in the assessment and uncertainties in the global economic conditions because of the COVID - 19 pandemic . The determination of the NRV involves estimates based on prevailing market conditions and taking into account the estimated future selling price
- Obtained read and assessed the management's process in estimating the future costs to completion for stock of ongoing projects.
- Assessed the methods used by the management in determining the NRV of ongoing and completed real estate projects including assessment made by the management on possible effects that may result from the pandemics relating to COVID-19 on the carrying value of the inventory and tested the underlying assumptions used by the management in arriving at those projections.
Performed sensitivity analysis on these key assumptions to assess any potential downside.
- For sample of selected projects:
• Compared the forecasted costs to complete the project to the construction costs of other similar projects
• Compared the NRV to recent sales in the project or to the estimated selling price. Compared the carrying value to the NRV.
Assessing carrying value of investment in subsidiaries and joint ventures
As at March 31 2020 the carrying value of Company's investment in subsidiaries and joint ventures is Rs. 18039.79 lacs. Management reviews on a periodical basis whether there are any indicators of impairment of such investments. Our procedures in assessing the impairment of the investment include the following
- We evaluated the accounting policies with respect to investment.
- We assessed Company's evaluation of whether there are any indicators of impairment of such investment.
For investments where impairment indicators exist management estimated the recoverable amounts of the investments being higher of fair value less costs of disposal and value in use. Significant judgements are required to determine the key assumptions used in determination of fair value / value in use.
- We assessed the Company's valuation methodology in determining the recoverable amount.
- We compared the recoverable amount of the investment to the carrying value in books.
As the impairment assessment involves significant assumptions and judgement we regard this as a key audit matter.
- We assessed the disclosures made in the standalone Ind AS financial statements regarding such investments.

Other Information

The Company's Board of Directors is responsible for the otherinformation. The other information comprises the information included in the director'sreport but does not include the standalone Ind AS financial statements and our auditor'sreport thereon.

Our opinion on the standalone Ind AS financial statements does notcover the other information and we do not express any form of assurance conclusionthereon.

In connection with our audit of the standalone Ind AS financialstatements our responsibility is to read the other information and in doing so considerwhether such other information is materially inconsistent with the financial statements orour knowledge obtained in the audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.

Responsibilities of Management for the Standalone Ind AS FinancialStatements

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 Ind ASfinancial statements that give a true and fair view of the financial position financialperformance including other comprehensive income cash flows and changes in equity of theCompany in accordance with the accounting principles generally accepted in Indiaincluding the Indian Accounting Standards (Ind AS)

specified under section 133 of the Act read with the Companies (IndianAccounting Standards) Rules 2015 as amended. This responsibility also includesmaintenance of adequate accounting records in accordance with the provisions of the Actfor safeguarding of 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 the design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone Ind AS financial statements that give atrue and fair view and are free from material misstatement whether due to fraud or error.

In preparing the standalone Ind AS 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 Ind ASFinancial Statements

Our objectives are to obtain reasonable assurance about whether thestandalone Ind AS financial statements as a whole are free from material misstatementwhether due 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 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 Ind AS financialstatements.

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 Ind AS financial statements whether due to fraud or error design and performaudit procedures responsive to those risks and obtain audit evidence that is sufficientand appropriate 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)0) of the Act we are also responsible for expressing our opinion on whetherthe 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 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 standalone IndAS financial statements or if such disclosuresare inadequate to modify our opinion. Our conclusions are based on the audit evidenceobtained up to the date of our auditor's report. However future events or conditions maycause the Company to cease to continue as a going concern.

• Evaluate the overall presentation structure and content of thestandalone Ind AS financial statements including the disclosures and whether thestandalone Ind AS financial statements represent the underlying transactions and events ina manner that achieves 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 standalone IndAS financial statements for the financial year ended March 31 2020 and are therefore thekey audit matters. We describe these matters in our auditor's report unless law orregulation precludes public disclosure about the matter or when in extremely rarecircumstances we determine that a matter should not be communicated in our report becausethe adverse consequences of doing so would reasonably be expected to outweigh the publicinterest benefits of such communication.

Other Matter

We did not audit the financial statements and other financialinformation in respect of 2 LLPs whose Ind AS financial statements include Company'sshare of net (loss) of Rs. (15.99) lakhs and Company's share of total comprehensive income(loss) of Rs. (15.99) lakhs for the year ended March 31 2020. These Ind AS financialstatements and other financial information of the said LLPs have been audited by otherauditors whose financial statements other financial information and auditor's reportshave been furnished to us by the management. Our opinion on the standalone Ind ASfinancial statements in so far as it relates to the amounts and disclosures included inrespect of these LLPs and our report in terms of subsections (3) of Section 143 of theAct in so far as it relates to the

aforesaid LLPs is based solely on the reports of such other auditors.

Our opinion is not modified in respect of this matter.

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 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 Balance Sheet the Statement of Profit and Loss including theStatement of Other Comprehensive Income the Cash Flow Statement and Statement of Changesin Equity dealt with by this Report are in agreement with the books of account;

(d) In our opinion the aforesaid standalone Ind AS financialstatements comply with the Accounting Standards specified under Section 133 of the Actread with Companies (Indian Accounting Standards) Rules 2015 as amended;

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

(f) With respect to the adequacy of the internal financial controlsover financial reporting of the Company with reference to these

standalone Ind AS financial statements and the operating effectivenessof such controls refer to our separate Report in "Annexure 2" to this report;

(g) In our opinion the managerial remuneration for the year endedMarch 31 2020 has been paid / provided by the Company to its directors in accordance withthe provisions of section 197 read with Schedule V to the Act; and

(h) 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 disclosed the impact of pending litigations on itsfinancial position in its standalone Ind AS financial statements - Refer Note 28 to thestandalone Ind AS financial statements;

ii. The Company did not have any long-term contracts includingderivative contracts for which there were any material foreseeable losses; and

iii. There were no amounts which were required to be transferred to theInvestor Education and Protection Fund by the Company.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sukrut Mehta

Partner

Membership Number: 101974

UDIN: 20101974AAAABM7491

Place of Signature: Ahmedabad

Date: June 25 2020

Annexure 1 Referred to in paragraph on report on other Legal andRegulatory Requirements of our report of even date of Arvind Smartspaces Limited For theyear ended March 31 2020

(i) (a) The Company has maintained proper records showing full

particulars including quantitative details and situation of propertyplant and equipment.

(b) Property plant and equipment has been physically verified by themanagement during the year and no material discrepancies were identified on suchverification.

(c) According to the information and explanations given by themanagement the title deeds of immovable properties included in property plant andequipment are held in the name of the company.

(ii) The management has conducted physical verification of inventory atreasonable intervals during the year and no material discrepancies were noticed on suchphysical verification.

(iii) According to the information and explanations given to us theCompany has not granted any loans secured or unsecured to companies firms LimitedLiability Partnerships or other parties covered in the register maintained under section189 of the Companies Act 2013. Accordingly the provisions of clause 3(iii)

(a) (b) and (c) of the Order are not applicable to the Company andhence not commented upon.

(iv) In our opinion and according to the information and explanationsgiven to us provisions of section 185 and 186 of the Companies Act 2013 in respect ofloans to directors including entities in which they are interested and in respect of loansand advances given investment made and guarantees and securities given are notapplicable to the company.

(v) The Company has not accepted any deposits within the meaning ofSections 73 to 76 of the Act and the Companies (Acceptance of Deposits) Rules 2014 (asamended). Accordingly the provisions of clause 3(v) of the Order are not applicable

(vi) We have broadly reviewed the books of account maintained by theCompany pursuant to the rules made by the Central Government for the maintenance of costrecords under section 148(1) of the Companies Act 2013 related to real estatedevelopment and are of the opinion that prima facie the specified accounts and recordshave been made and maintained. We have not however made a detailed examination of thesame.

(vii) (a) Undisputed statutory dues including provident fund

employees' state insurance income-tax duty of customs goods andservice tax cess and other statutory dues have generally been regularly deposited withthe appropriate authorities though there has been a slight delay in a few cases.

(b) According to the information and explanations given to us noundisputed amounts payable in respect of provident fund employees' state insuranceincome-tax duty of custom goods and service tax cess and other statutory dues wereoutstanding at the year end for a period of more than six months from the date theybecame payable.

(c) According to the information and explanation given to us there areno dues of income tax sales tax service tax duty of customs duty of excise and valueadded tax which have not been deposited with the appropriate authorities on account of anydispute except for the following:

Name of the statute Nature of the dues Amount (Rs. lacs) Period to which the amount relates Forum where the dispute is pending
The Income taxAct 1961 Income tax 87.24 PY 2011-12 ITAT
The Income taxAct 1961 Income tax 403.30 PY 2013-14 ITAT
The Income taxAct 1961 Income tax 50.68 PY 2016-17 CIT(A)

(viii) In our opinion and according to the information and explanationsgiven by the management the Company has not defaulted in repayment of loans or borrowingfrom banks or financial institution. The Company did not have any due payable to thedebenture holders and government during the year.

(ix) In our opinion and according to the information and explanationsgiven by the management the Company has utilized the monies raised by way of term loansfor the purposes for which they were raised. The Company has not raised any money by wayof initial public offer further public offer and debt instruments during the year.

(x) Based upon the audit procedures performed for the purpose ofreporting the true and fair view of the financial statements and according to theinformation and explanations given by the management we report that no fraud by thecompany or no fraud on the company by the officers and employees of the Company has beennoticed or reported during the year.

(xi) According to the information and explanations given by themanagement the managerial remuneration has been paid / provided in accordance with therequisite approvals mandated by the provisions of section 197 read with Schedule V to theCompanies Act 2013.

(xii) In our opinion the Company is not a Nidhi company. Thereforethe provisions of clause 3(xii) of the order are not applicable to the Company and hencenot commented upon.

(xiii) According to the information and explanations given by themanagement transactions with the related parties are in compliance with section 177 and188 of Companies Act 2013 where applicable and the details have been disclosed in thenotes to the Ind AS financial statements as required by the applicable accountingstandards.

(xiv) According to the information and explanations given to us and onan overall examination of the balance sheet the company has not made any preferentialallotment or private placement of shares or fully or partly convertible debentures duringthe year under review and hence reporting requirements under clause 3(xiv) are notapplicable to the company and not commented upon.

(xv) According to the information and explanations given by themanagement the Company has not entered into any non-cash transaction with directors orpersons connected with him as referred to in section 192 of Companies Act 2013.

(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 and hence not commented upon.

For S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sukrut Mehta

Partner

Membership Number: 101974

UDIN: 20101974AAAABM7491

Place of Signature: Ahmedabad

Date: June 25 2020

Annexure 2 to the Independent Auditor's Report of even date on

The Standalone Ind As Financial Statements of Arvind Smartspaces Limted

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 Arvind SmartSpaces Limted ("the Company") as of March 31 2020 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 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 the Company's policies the safeguardingof its 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 Companies Act 2013.

Auditor's Responsibility

Our responsibility is to express an opinion on the Company's internalfinancial controls over financial reporting with reference to these standalone financialstatements based on our audit. We conducted our audit in accordance with the Guidance Noteon Audit of Internal Financial Controls Over Financial Reporting (the "GuidanceNote") and the Standards on Auditing as specified under section 143(10) of theCompanies Act 2013 to the extent applicable to an audit of internal financial controlsand both issued by the Institute of Chartered Accountants of India. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting with reference to these standalone financial statementswas established and maintained and if such controls operated effectively in all materialrespects.

Our audit involves performing procedures to obtain audit evidence aboutthe adequacy of the internal financial controls over financial reporting with reference tothese standalone financial statements and their operating effectiveness. Our audit ofinternal financial controls over financial reporting included obtaining an understandingof internal financial controls over financial reporting with reference to these standalonefinancial statements assessing the risk that a material weakness exists and testing andevaluating the design and operating effectiveness of internal control based on theassessed risk. The

procedures selected depend on the auditor's judgement including theass essment of the risks of material misstatement of the financial statements whether dueto 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 internal financial controlsover financial reporting with reference to these standalone financial statements.

Meaning of Internal Financial Controls Over Financial Reporting WithReference to these Financial Statements

A company's internal financial control over financial reporting withreference to these standalone financial statements is a process designed to providereasonable assurance regarding the reliability of financial reporting and the preparationof financial statements for external purposes in accordance with generally acceptedaccounting principles. A company's internal financial control over financial reportingwith reference to these standalone financial statements includes those policies andprocedures 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 as necessary topermit preparation of financial statements in accordance with generally acceptedaccounting principles and that receipts and expenditures of the company are being madeonly in accordance with authorisations of management and directors of the company; and (3)provide reasonable assurance regarding prevention or timely detection of unauthorisedacquisition use or disposition of the company's assets that could have a material effecton the financial statements.

Inherent Limitations of Internal Financial Controls Over FinancialReporting With Reference to these Standalone Financial Statements

Because of the inherent limitations of internal financial controls overfinancial reporting with reference to these standalone financial statements including thepossibility of collusion or improper management override of controls materialmisstatements due to error or fraud may occur and not be detected. Also projections ofany evaluation of the internal financial controls over financial reporting with referenceto these standalone financial statements to future periods are subject to the risk thatthe internal financial control over financial reporting with reference to these standalonefinancial statements may become inadequate because of changes in conditions or that thedegree of compliance with the policies or procedures may deteriorate.

Opinion

In our opinion the Company has in all material respects adequateinternal financial controls over financial reporting with reference to these standalonefinancial statements and such internal financial controls over financial reporting withreference to these standalone

financial statements were operating effectively as at March 31 2020based on the 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 S R B C & CO LLP

Chartered Accountants

ICAI Firm Registration Number: 324982E/E300003

per Sukrut Mehta

Partner

Membership Number: 101974 UDIN: 20101974AAAABM7491

Place of Signature: Ahmedabad Date: June 25 2020