Report on the Audit of the Standalone Financial Statements Opinion
We have audited the standalone financial statements of East Buildtech Limited("the Company") which comprise the balance sheet as at 31st March 2019 and thestatement of Profit and Loss statement of changes in equity and statement of cash flowsfor the year then ended and notes to the financial statements including a summary ofsignificant accounting policies and other explanatory information. In our opinion and tothe best of our information and according to the explanations given to us the aforesaidstandalone financial statements give the information required by the Act in the manner sorequired and give a true and fair view in conformity with the accounting principlesgenerally accepted in India of the state of affairs of the Company as at March 31 2019and profit/ loss changes in equity and its cash flows for the year ended on that date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SAs) specified theCompanies Act 2013. Our responsibilities under those Standards are further described inthe Auditor's Responsibilities for the Audit of the 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 together with the ethical requirements thatare relevant to our audit of the financial statements under the provisions of theCompanies Act 2013 and the Rules there under 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 for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance audit of the financial statements of the current period.
These matters were addressed in the context of our audit of the financial statements asa whole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
1. The company has a matter related to service tax under dispute appeal pending beforeCustom Excise
& service tax Appellate Tribunal which involves judgement to determine the possiblesignificant outcome of these disputes (Refer note 20 to the Ind
AS financial statements). We obtained the details of the dispute with their presentstatus and documents.
We made an in depth analysis of the dispute. We also considered legal procedures andother rulings in evaluating management's position on this dispute to evaluate whether anychange was required to management's position on this dispute.
2. As on 31st March 2019 current tax assets includes amounts recoverable from incometax department for which efforts for recovery are being made (Refer note 10 to the Ind ASfinancial statements). Our audit procedures consisted of evaluating whether any change wasrequired to management's position on these uncertainties and the likelihood ofrecoverability.
3. Company deals in real estate business. Inventory of Commercial space is appearingsince a considerable period due to slow down. Our audit procedures consisted ofevaluating whether any change was required to management's position on these uncertaintiesand the likelihood of recoverability.
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 Board'sReport including Annexures to Board's Report but does not include the standalonefinancial statements and our under section 143(10) of auditor's report thereon. TheBoard's Report including Annexures to Board's Report is expected to be made available tous after the date of this auditor's report.
Our opinion on the standalone financial statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements our responsibilityis to read the other information identified above when it becomes available and in doingso consider whether the other information is materially inconsistent with the standalonefinancial statements or our knowledge obtained during the course and appropriate toprovide a basis of our audit or otherwise appears to be materially misstated.
When we read the Board's report including annexures to Board's Report If we concludethat there is a material misstatement of this other information; we are in our required tocommunicate the matter to those charged with governance.
Responsibilities of Management and Those Charged With Governance for the StandaloneFinancial Statements
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 theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these 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 financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
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 ouropinion on whether the company has adequate internal financial controls system in placeand the operating 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 doubt on the
Company's ability to continue as a going concern. If we conclude that a materialuncertainty exists we are required to draw attention in our auditor's report to therelated disclosures in the financial statements or if such disclosures are inadequate tomodify our opinion. Our conclusions are based on the audit evidence obtained up to thedate of our auditor's report. However future events or conditions may cause the Companyto cease to continue as a going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.Materiality is the magnitude of misstatements in the standalone financial statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the financial statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the financial statements.
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 alsoprovide those charged with governance with a statement that we have complied with relevantethical requirements regarding independence and to communicate with them allrelationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards. From the matters communicated withthose charged with governance we determine those matters that were of most significancein the audit of the financial statements of the current period and are therefore the keyaudit matters. We describe these matters in our auditor's report unless law or regulationprecludes public disclosure about the matter or when in extremely rare circumstances wedetermine that a matter should not be communicated in our report because the adverseconsequences of doing so would reasonably be expected to outweigh the public interestbenefits of such communication.
Report on Other Legal and Regulatory Requirements
As required by the Comanies (Auditor's Report) Order 2016 (" the order")Issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in the "Annexure A" statement on the matterspecified in paragraphs 3 and 4 of the Order to the extent application.
As required by Section 143(3) of the 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 so far as it appears from our examination of those books
c) The Balance Sheet the Statement of Profit Loss Statement of Changes in Equity andthe Cash Flow Statement dealt with by this Report are in agreement with the books ofaccount. d) In our opinion the a fore said standalone financial statements comply withthe Accounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies(Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
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 B".
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 duringthe year the Company has not paid/provided any remuneration to its directors.
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 opinion and to the best of ourinformation and according to the explanations given to us:
(i) The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements - Refer note no. 20 to the financialstatements.
(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
For B.K.Shroff & Co.
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Date : 30.05.2019
Annexure A referred to in paragraph (1) under the heading of "Report on OtherLegal and Regulatory requirements" of our report of even date
(i) (a) The company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) All the fixed assets have been physically verified by the management according to aregular program which in our opinion is reasonable having regard to the size of thecompany and the nature of its assets. No material discrepancies with respect to bookrecords were noticed on such verification.
Discrepancies noticed have been properly dealt with in the books of account.
(c) The title deeds of immovable properties are held in the name of the company.
(ii) (a) The stock of saleable commercial space has been physically verified atreasonable intervals by the management during the year. In our opinion the frequency ofverification is reasonable.
(b) The procedure for physical verification of inventory (saleable commercial space)followed by management are reasonable and adequate in relation to the size of company andnature of its business.
(c) The company is maintaining proper records of inventory (saleable commercial space).Discrepancies noticed on verification of inventory as compared to book records were notmaterial.
(iii) The company has not granted any loans secured or unsecured to companies firmslimited liability partnerships or other parties covered in the register maintained undersection 189 of the Companies Act 2013 and as such clauses (iii) (a) (b) and (c) of theorder are not applicable to the company.
(iv) In our opinion and according to the information and explanations given to us noloans investments guarantees and security covered under section 185 and 186 of theCompanies Act 2013 has been given by the company.
(v) According to the information and explanation given to us the company has notaccepted any deposit from the public. Therefore the provisions of clause (v) of the orderare not applicable to the company.
(vi) As informed to us Company is not required to maintain any cost records asprescribed by the Central Government under section 148(1) of companies act 2013 (vii) (a)The company is generally regular in depositing with the appropriate authorities undisputedstatutory dues including provident fund employees state insurance income tax sales taxservice tax duty of custom duty of excise value added tax cess and any other statutorydues applicable to it. According to the information and explanations given to us noundisputed amounts payable in respect thereof were outstanding as at 31st March2019 for aperiod of more than six months from the date they became payable.
(b) According to the records of the company dues of income-tax or Sales tax or servicetax or duty of custom or duty of excise or value added tax which have not been depositedon account of any dispute are as under:
|Name of the Statute ||Nature of Dues ||Amount (Rs.) ||Period which amount relates ||Forum where pending |
|Service tax ||Disputed service tax and demand ||713464 ||2009-10 & 2010-11 ||Custom Excise & Service Tax Appellate Tribunal |
(viii) In our opinion and according to the information and explanations given to usthe company has not defaulted in repayment of loans or borrowings to a financialinstitution bank government or dues to debenture holders. (ix) In our opinion duringthe year no money has been raised by way of initial public offer or further public offer(including debt instruments) or term loans have been raised during the year.
(x) According to the information and explanations given to us no fraud by the companyor on the company by its officers or employees has been noticed or reported during theyear.
(xi) According to the information and explanations given to us the company has paid/provided the managerial remuneration in accordance with the requisite approvals mandatedby the provisions of section 197 read with Schedule V to the CompaniesAct.
(xii) The company is not a Nidhi company and hence provisions of clause (xii) of theorder are not applicable to the company.
(xiii) In our opinion all transactions with the related parties are in compliance withsection 177 and 188 of Companies Act 2013 where applicable and the details have beendisclosed in the financial statements etc. as required by the applicable accountingstandards.
(xiv) During the year under review the company has not made any preferential allotmenton private placement of shares or fully or partly convertible debentures.
(xv) The company has not entered into any non cash transactions with directors orperson(s) connected with him.
(xvi) The Company is not required to be registered under section 45-1A of the ReserveBank of India Act 1934
| ||For B.K.Shroff & Co. |
| ||Chartered Accountants |
| ||Reg. No. : 302166E |
|Place : New Delhi || |
|Date : 30.05.2019 ||Partner |
| ||Membership Number: 90378 |
Annexure B to the Auditor's Report
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 EastBuildtech Limited ("the Company") as of March 31 2019 in conjunction with ouraudit of the IND AS financial statements of the Company for the year ended on that date.
Management's Responsibility for Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls 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 Reporting (the"Guidance Note") issued by the Institute of Chartered Accountants of India(ICAI)". These responsibilities include the design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theorderly and efficient conduct of its business including adherence to company's policiesthe safeguarding of its assets the prevention and detection of frauds and errors theaccuracy and completeness of the accounting records and the timely preparation ofreliable financial information as required under the Act.
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 and the Standards on Auditing issued by ICAI and deemed to beprescribed under section 143(10) of the Act to the extent applicable to an audit ofinternal financial controls both applicable to an audit of Internal Financial Controlsand both issued by the ICAI. Those Standards and the Guidance Note require that we complywith ethical requirements and plan and perform the audit to obtain reasonable assuranceabout whether adequate internal financial controls over financial reporting wasestablished and maintained and if such controls operated respects. effectively
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 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 /our auditopinion on the Company's internal financial controls system over 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:
a) pertain to the maintenance of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the Company;
b) 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
c) 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.
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.
In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were effectivelyas operating at 31 March 2019 based on "theinternal control over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note issued by theICAI".
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Delhi Date : 30.05.2019