CHD Developers Ltd.
|BSE: 526917||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE659B01021|
|BSE 00:00 | 24 Aug||CHD Developers Ltd|
|NSE 05:30 | 01 Jan||CHD Developers Ltd|
|BSE: 526917||Sector: Infrastructure|
|NSE: N.A.||ISIN Code: INE659B01021|
|BSE 00:00 | 24 Aug||CHD Developers Ltd|
|NSE 05:30 | 01 Jan||CHD Developers Ltd|
To the Members of CHD Developers Limited
Report on the Audit of Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of CHD DevelopersLimited ('the Company') which comprise the Balance Sheet as at 31st March2020 the Statement of Profit and Loss (including other comprehensive income) statementof change of equity and statement of cash flows for the year then ended and notes to thestandalone financial statements including a summary of significant accounting policiesand other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us except for the matters described in the Basis for Qualified Opinion sectionof our report the aforesaid standalone financial statements give the information requiredby the Companies Act 2013 ('the Act') in the manner so required and give a true and fairview in the conformity with the accounting principles generally accepted in Indiaincluding Indian Accounting Standards ('Ind AS') specified under section - 133 of the Actof the state of affairs of the Company as at 31st March 2020 and its Loss andother comprehensive income change in equity and cash flows for the year ended on thatdate.
Basis for Qualified Opinion
a. The home buyers have filed complaint against defaults by the Company in"National Company Law Tribunal" ('the Tribunal'). The order is reserved by theTribunal on 24- Sep-2019 initially and further again on 01-Mar-2021. The performance andfinancial position of the Company over the foreseeable future is dependent on the outcomeof the order of the Tribunal. In absence of any material certainty impacting the control/existence of the management of the Company we are unable to comment on the Going Concerncapabilities of the Company.
b. The Company has not made periodic repayment of loans taken from banks Rs. 11905.47lakhs (including overdraft balances) and from financial institutions Rs. 12786.87 lakhssince Oct-2019 soon after NCLT Order reserved on 24-Sep-2019. The interest late paymentfees or penalties for default chargeable by concerned authorities are not ascertainable.Accordingly effect for the same on financial position of the Company cannot be commentedupon.
c. The Company has not repaid matured public deposits of Rs. 1891.96 lakhs andinterest on public deposits Rs. 261.70 lakhs during the year. The effect on the financialposition of the Company due to penalties fines and other unfavorable action to be takenby the regulating authorities cannot be commented up0f^?~'\
d. As required by SEBI regulations the Company has not filed quarterly financials withthe stock exchange since June-2019. The penalties and fine for the non-compliance cannotbe ascertained and commented upon.
e. As per SA 570 "Going Concern" there are various events or conditionsthat individually or collectively may affect the entity's ability to continue as a goingconcern. As stated in Cash Flow Statement there is negative operating cash flows for lastfour financial years amounting to Rs. 4081.14 lakhs for FY 2016-17 Rs. 6094.78 lakhsfor FY 2017-18 and Rs. 4700.39 lakhs for FY 2018-19. This indicates high net liabilityor net current liability position and adverse key financial ratios for the period. Inabsence of any material certainty impacting the current and future cash flow projectionwe are unable to comment on the Going Concern capabilities of the Company. Previousauditor had also commented on the same in their audit report. Further the Company istrying hard to conclude renegotiations or obtain alternate financing arrangements. But dueto COVID-19 pandemic situation and numerous lockdowns imposed by the Government noconclusive results have been obtained till date.
f. Statutory Dues that include TDS Payable (i.e. TDS deducted but not deposited)amounting to Rs. 80.36 lakhs and PF Payable amounting Rs. 9.55 lakhs are not depositedtill the date of signing of audit report. The effect on the financial position of theCompany due to penalties for non-compliance cannot be ascertained.
g. Confirmation of balance for Trade payables Rs. 3635.52 lakhs were not received bythe Company. Any adjustment in the recorded amount payable cannot be ascertained.
h. Confirmation of Trade receivables Security Deposits Bank Deposits some of theBank Balances and Advances Paid was not received by the Company. In absence ofconfirmations the recoverability of the recorded amount cannot be commented upon.
i. Proper supporting's for the expenses incurred were not maintained by the Company. Inabsence of the proper supporting documents the genuineness of the expenses cannot becommented upon.
Irrespective of the irregularities mentioned above the management has prepared thefinancial statements on Going Concein basis and all the assets and liabilities arerecorded at book value in place net realizable value.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statements sectionof our report. We are independent of the Company in accordance with the Code of Ethicsissued 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 Companies Act 2013 and the Rules thereunder and we have fulfilled ourother ethical responsibilities in accordance with these requirements and Jl^erGpd^of
Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our qualified opinion.
Key Audit Matters
Key Audit Matters are those matters that in our professional judgment were of mostsignificant in our audit of standalone financial statement. These matters were addressedin context of our audit of the standalone financial statement as the whole and in formingour opinion thereon and we do not provide a separate opinion on these matters.
All the relevant key audit matters are already described in the Basis of QualifiedOpinion section of our report.
Information Other Than Standalone Financial Statements and Auditor's Report Thereon
The Company's management and Board of Directors are responsible for the preparation ofthe other information. The other information comprises of the information included in theManagement Discussion and Analysis Board Report including Annexure therein PerformanceReview and Corporate Governance but does not include the standalone financial statementand our auditor's report thereon. Our opinion on the standalone financial statements doesnot cover the other information and we do not express any form of assurance conclusionthereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the financial statements or our knowledge obtained duringthe course of audit or otherwise appear to be materially misstated. If based on the workwe have performed we conclude that there may be some material misstatement of this otherinformation we are required to report the fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the FinancialStatements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese Standalone Financial Statements that give a true and fair view of the financialposition financial performance changes in equity and cash flows 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. Thisresponsibility also includes maintenance of adequate accounting records in accordance withthe provisions of the Act for safeguarding of the assets of the Company and for preventingand detecting frauds and other irregularities; selection and application of appropriateaccounting policies; making judgments and estimates that are reasonable and prudent; anddesign implementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the standalone financial statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting^qrjJiis^i^
Board of Directors either intends to liquidate the Company or to cease operations orhas no realistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the company's financialreporting process.
Auditor's Responsibilities for the Audit of the 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 control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under section 143(3)(i)of the Companies Act 2013 we are also responsible for expressing our opinion on whetherthe company has adequate internal financial controls system in place and the operatingeffectiveness 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 doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report.
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.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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 the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure- I" 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 except for the possible effects of the matters described in theBasis for Qualified Opinion paragraph obtained all the information and explanations whichto the best of our knowledge and belief were necessary for the purposes of our audit;
b) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion proper books of account as required by law have beenkept by the Company so far as it appears from our examination of those books;
c) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph the Balance Sheet and the Statement of Profit and Loss (including othercomprehensive income) statement of changes in equity and the Cash Flow Statement dealtwith by this Report are in agreement with the books of account;
d) Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our opinion the aforesaid financial statements comply with theIndian Accounting Standards (Ind AS) specified under section 133 of the Act read withRule 7 of Companies (Accounts) Rules 2014;
e) The matters described in the Basis for Qualified Opinion paragraph may have anadverse effect on the functioning of the Company;
f) On the basis of the written representations received from the directors as on 31stMarch 2020 taken on record by the Board of Directors none of directors is disqualifiedas on 31st March 2020 from being appointed as a director in terms of Section164 (2) of the Act.
g) 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- II".
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 in our opinionand to the best of our information and according to the explanations given to us:
i. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph the Company does not have any pending litigations which would impactits financial position.
ii. Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph the Company did not have any long-term contracts including derivativecontracts for which there were any material foreseeable losses;
iii. The Company has deposited negligible amount out of Rs. 2.51 lakhs which wasrequired to transfer to the Investor Education and Protection Fund by the Company duringthe year ended 31st March 2020.
3. As required by Section 197(16) of the Act we report that the Company has paidremuneration to its directors during the year in accordance with the provisions of andlimits laid down under section - 197 of the Act read with Schedule V to the Act.
"ANNEXURE - I" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 1 of 'Report on Other Legal and Regulatory Requirements'section of our report of even date)
On the basis of information and explanations given to us during the course of audit wereport that
i) In respect of Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details except the situation of fixed assets.
a) The Company has no program of verification to cover all the items of fixed assets ina phased manner and no such report is provided to us.
b) The records for immovable properties of Land and Building are not provided to us.So the nature of title deeds of immovable properties cannot be comment upon.
ii) The Company has not updated records for the inventory recorded.
iii) The Company has not granted any loan secured or unsecured to companies firmsLimited Liability Partnership or to other parties covered in the register maintained undersection 189 of the Act. Therefore clause (iii) of the Order is not applicable to theCompany.
iv) The Company has not granted any loan made any investment guarantees and security.So the compliance with the provisions of section 185 and 186 of the Act is not required.
v) The Company has not complied with the provisions of Section 73 to 76 and rulesframed there under companies (Acceptance of Deposits) Rules 2014 to the extant notifiedsince no repayment was made for the matured deposit and interest during the year.
vi) We have not reviewed the books of accounts maintained by the company pursuant tothe rules maintained by the Central Government for the maintenance of cost records underSection 148(1) of the Companies Act 2013 related to construction activities since thesame has not been provided to us.
vii) In respect of statutory dues:
a) The undisputed statutory dues including provident fund employees' state insuranceincome-tax sales tax service tax duty of customs duty of excise value added taxcess Goods and Services tax and any other statutory dues as applicable have not beendeposited with the appropriate authorities with in the required time period. Few of thestatutory dues outstanding from more than six months are mentioned below:
b) The details of dues of income tax or goods and services tax or duty of customs orduty of excise or value added tax or cess which have not been deposited on account of anydispute are given below:
viii) The Company has not made periodic repayment against the loans or borrowings takenfrom banks or financial institutions or government and debenture holders during the yearas mentioned in the Basis of Qualified Opinion section of the main report.
ix) The company has not raised money by way of initial public offer or further publicoffer (including debt instruments) during the year or any term loans.
x) No fraud on the company or by the company by its officers or employees has beennoticed or reported during the course of our audit.
xi) The Company has paid managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii) The Company is not a Nidhi Company. Therefore clause (xii) of the Order is notapplicable to the Company.
xiii) The transactions with the related parties are in compliance with sections 177& 188 of the Act where applicable and details of such transactions have been disclosedin the financial statements as required by the applicable accounting standards.
xiv) The company has not made any preferential allotment or private-placements ofshares or fully or partly convertible debentures during the year.
xv) The Company has not entered into non-cash transaction with directors or personsconnected with him. Therefore clause (xv) of the Order is not applicable to the Company.
xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
"ANNEXURE - II" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 (f) under 'Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of CHDDevelopers Limited ("the Company") as of 31st March 2020 in conjunctionwith our audit of the Financial Statements of the Company for the year ended on that date.
Except for the possible effects of the matters described in the Basis for QualifiedOpinion paragraph in our main audit report in our opinion the Company has an adequateinternal financial controls system over financial reporting and such internal financialcontrols over financial reporting were operating effectively as at 31st March 2020 basedon 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.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal controls 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 fiiidiicidlcontrols 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 conJpai^Qperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment 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 (1) pertain to the maintenance ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorizations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorized acquisition use or disposition of thecompany's assets that could have a material effect on the financial statements.
Inherent Limitations of Internal Financial Controls over Financial Reporting
Because of the inherent limitations of internal financial controls over financialreporting including the possibility of collusion or improper management override ofcontrols material misstatements due to error or fraud may occur and not be detected.Also projections of any evaluation of the internal 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.