To the Members of Excel Realty n Infra Limited
Report on the Audit of the Standalone Financial Statements
We have audited the standalone financial statements of Excel Realty n Infra 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 financialstatementsincluding significantaccountingsummaryof policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 and profit/loss 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) specifiedunder section 143(10) of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibilities for the Audit of theFinancial Statements section of our report. We are independent of the Company inaccordance 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 thefinancialstatements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the financial statements of the current period. These matterswere addressed in the context of our audit of the financial statements as a whole and informing our opinion thereon and we do not provide a separate opinion on these matters.
Description of each key audit matter in accordance with SA 701:
|The Key Audit Matter ||How the matter was addressed in our Audit |
|Revenue Recognition ||Principal Audit Procedures |
|Revenue from the sale of goods (hereinafter referred to as "Revenue") is recognised when the Company performs its obligation to its customers and the amount of revenue can be measured reliably and recovery of the consideration is probable. The timing of such recognition in case of sale of goods is when the control over the same is transferred to the customer which is mainly upon delivery. The timing of revenue recognition is relevant to the reported performance of the Company. The management considers revenue as a key measure for evaluation of performance. There is a risk of revenue being recorded before control is transferred. ||Our audit approach was a combination of test of internal controls and substantive procedures including: |
| || Assessing the appropriateness of the Company's revenue recognition accounting policies in line with Ind AS 115 ("Revenue from Contracts with Customers") and testing thereof. |
| || Evaluating the integrity of the general information and technology control environment and testing the operating effectiveness of key IT application controls. |
| || Evaluating the design and implementation of Company's controls in respect of revenue recognition. |
| || Testing the effectiveness of such controls over revenue cut off at year-end. |
|Refer to the Standalone Financial Statements - Significant Accounting Policies || Testing the supporting documentation for sales transactions recorded during the period closer to the year end and subsequent to the year end including examination of credit notes issued after the year end to determine whether revenue was recognised in the correct period. |
| || Performing analytical procedures on current year revenue based on monthly trends and where appropriate conducting further enquiries and testing |
|Investment in Properties || |
|The company has invested significant. ||We have evaluated the design and implementation of the acquisition process and verified whether all procedures were performed and approvals were obtained as set forth by the Company's agreements and guidelines. We further verified accurate and complete initial recognition of the portfolio by agreeing the recorded amounts to external documents such We verified whether the transaction was recorded and disclosed as required by the applicable accounting principles. |
|These investments are held for Investment for long term. || |
|The recognition of investment in properties (under Acquisition) is a key matter during our audit due to the size of the transaction and the associated complex accounting issues including proper disclosure. The transaction was further a significant undertaking for the operations of the companyas purchase agreements. from deal-related procedures to proper integration of the administration. || |
|Refer to note no. 3 attached to the Financial statements. || |
|Loans and Advances || |
|The material amount of Loans and Advances made to various corporates Individuals etc. These loans are classified as Short term loans and repayable on demand. ||Allowance for impairment losses represented management's best estimates of losses incurred within loans and advances to other parties as at the balance sheet date. The allowance was computed individually or on a collective basis where appropriate. |
|As at 31st March 2019 loans and advances to parties amounted to Rs. 2458.29 Lakh and the corresponding allowance for impairment losses was Nil. ||Corporate loans were initially assessed for impairment individually by management. |
|Refer to note no. 9 attached to the Financial statements || |
| ||Non-impaired corporate loans and all personal loans were included in homogeneous groups with similar credit risk characteristics for performance of impairment assessments on a collective basis considering the similarity of credit risks and applying key assumptions such as historical loss experience loss identification period for incurred but unidentified impairment losses macro-economic factors and special considerations for high risk products and geographical locations in the calculation methodology. Management assessed these key assumptions on a periodic basis and made adjustments where deemed appropriate. |
|Recoverability of investment || |
|Recoverability of the investment and loans in subsidiary is not considered a high risk of significant misstatement or subject to significant judgment. However due to the materiality of the investment in the context of the parent Company financial statements this is considered to be the area that had the greatest focus of our overall parent Company audit. ||Our procedures included: |
| ||Tests of detail: |
|Refer to note no. 3 & 9 attached to the Financial statements ||Compared the carrying amount of a sample of the highest value investments being an approximation of their minimum recoverable amount were in excess of their carrying amount and assessing whether those subsidiaries have historically been profit-making. |
| ||Assessing subsidiary audits: |
| ||Assessing the work performed during the subsidiary audits and considering the results of that work on profits and net assets. |
Emphasis of Matters
We draw attention to -
1. Refer to note no. 3 attach to the financial statement were Investment in propertiesconsist of advances paid for acquisition of Immovable property which are paid for morethan 36 months. In absence of specific timelines registered transfer deeds and externalvaluations there carrying values has been considered as fair values. No impairmentprovisions have been made there upon.
2. Sundry Debtors includes Rs. 251.31 Lakhs due for more than six months. No provisionhas been made in the books for the same as management has considered the same good andrecoverable.
3. Balances of Sundry Debtors and other current assets Trade payables Investment inProperties etc. are subject to confirmations and consequent changes if any.
4. Company has given Interest free unsecured loan to Associate/ Subsidiary company tothe extent of Rs. 3316.86 Lakh In absence of specific terms and conditions same has beenconsidered as Short term and accordingly classified as Current Assets. Further Companyhas made an investment of Rs. 18.91 Lakh in Associate/ Subsidiary company which has beenconsidered Long term investments.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors is responsible for the matters stated in section134(5) of the 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)5 and cash flows of the Company inaccordance with6 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 financial statements.
Paragraph 40(b) of this SA explains that the shaded material below can be located in anAppendix to the auditor's report. Paragraph 40(c) explains that when law regulation orapplicable auditing standards expressly permit reference can be made to a website of anappropriate authority that contains the description of the auditor's responsibilitiesrather than including this material in the auditor's report provided that the descriptionon the website addresses and is not inconsistent with the description of the auditor'sresponsibilities below.
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 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 financialstatements or if such disclosures are inadequate to modify our opinion. Ourconclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of thefinancialstatements including the disclosures and whether the financial statementsrepresent 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 anysignificantficiencies in internal control that we identify during our audit. de
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 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.
1. In certain cases the Company has given interest free loans which are not in linewith section 186(7) of the Companies Act 2013. Effect on the aforesaid non-compliancecould not be quantified.
2. Refer to note no. 9 attached to the Financial statements The Loans and Advancesgiven are closely monitored by Board of Directors and therefore no appraisal renewalpolicies procedures and documents has been executed. Our opinion is not modified inrespect of thismatter.
Report on Other Legal and Regulatory Requirements
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 ofthe Companies Act 2013 we give in the Annexure a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial specifiedunder statements complywith theAccounting Standards Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules
(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 isdisqualifiedas 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 A".
(g) 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:
1. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
2. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
ANNEXURE A TO THE AUDITORS' REPORT
The Annexure referred to in our Independent Auditors' Report to the members of theCompany on the standalone financial statements for the year ended March 31st 2019 wereport that:
(i) (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets.
(b) The Company has a regular program of physical verification of its fixed assets bywhich fixed assets are verified phased manner over a period of one years. In accordancewith this program certain fixed assets were verified during the year and no materialdiscrepancies were noticed on such verification. In our opinion this periodicity ofphysical verification is reasonable having regard to the size of the Company and thenature of its assets.
(c) According to explanation given to us the title deeds/ lease deeds are held in thename of the company.
(ii) (a) There are no inventories held by the Company.
(iii) (a) The Company has granted loans to one party covered in the register maintainedunder section 189 of the Companies Act2013 (the Act')
(b) In the case of the loans granted to any parties in the register maintained undersection 189 of the act the borrowers have been regular in the payment of the interest asstipulated. The terms of arrangements do not stipulate any repayment schedule and theloans are repayable on demand. Accordingly paragraph 3(ii) (b) of the order is notapplicable to the company in respect of payment of the principal amount.
(c) There are no overdue amounts for period of more than ninety days in respect of theloans granted to the bodies corporate listed in the register maintained under section 189of the act.
(iv) In our opinion and according to the information and explanations given to us theCompany has complied with provision of section 185 and 186 of Act with respect to theloan and investment made except for Loans made to certain parties where no interest hasbeen charged.
(v) The Company has not accepted any deposits during the year within the meaning of theprovisions of section 73 to 76 or any other relevant provisions of the Companies Act andthe rules framed there under.
(vi) The Central Government has not prescribed the maintenance of cost records undersection148 (1) of the Act for any of the services rendered by the Company
(vii) (a) According to the information and explanations given to us and on the basis ofour examination of the records the Company is regular in depositing undisputed statutorydues including provident fund income tax service tax cess and other material statutorydues with the appropriate authorities. As explained to us the Company did not have anydues on account of sales tax wealth tax duty of customs value added tax employees'state insurance and duty of excise.
(b) According to the information and explanation given to us there is no disputepending in respect of dues of provident fund/sales tax/wealth tax/service tax/customduty/excise duty/cess/value added tax were in arrears as at 31st march 2019 for a periodof more than six month from the date they became payable.
(viii) The Company did not have any outstanding dues to financial institutions banksor debenture holders during the year.
(ix) The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Accordinglyparagraph 3 (ix) of the Order is not applicable.
(x) Based upon the audit procedure performed for purpose of reporting the true and fairview of the Financial Statements and According to the information and explanations givento us no material fraud on or by the Company has been noticed or reported during thecourse of our audit.
(xi) According to the information and explanations given to us and based on ourexamination of the record of the Company managerial remuneration has been paid/providedin accordance with the requisite approvals.
(xii) In our opinion and according to the information and explanations given to us thecompany is not Nidhi Company. Accordingly paragraph 3(xii) of Order is not applicable.
(xiii) According to the information and explanations given to us and based on ourexamination of the records of the Company transactions with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the Standalone financial statements as required by theapplicable accounting standards.
(xiv) The company has not made any preferential allotment or private placement ofshares or fully or partly convertible debentures during the year under review.
(xv) According to the information and explanations given to us and based on ourexamination of the record of the Company the company has not entered into any non-cashtransactions with directors or persons connected with him.
(xvi) According to the information and explanations given to us the provisions of thesection 45-IA of the Reserve Bank of India
Act 1934 are not applicable to the company.
ANNEXURE B TO THE AUDITORS' 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 ExcelRealty n Infra Limited (the Company') 31st March 2019 in conjunction with our auditof the standalone 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 (the"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 to theCompany's policies safeguarding of its assets prevention and detection of frauds anderrors accuracy and completeness of the accounting records and 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 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 audit of Internal Financial Controls andboth issued by the Institute of Chartered Accountants of India. Those Standards and theGuidance Note require that we comply with ethical requirements and plan and perform theaudit to obtain reasonable assurance about whether adequate internal financial controlsover financial reporting was established and maintained and if such controls operatedeffectively 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 error financial statements whether duetofraud
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 of records that in reasonable detail accurately andfairly reflect the transactions and dispositions of the assets of the company;
(2) Provide reasonable assurance that transactions are recorded as necessary to permitpreparation of financial in accordance with generally accepted accounting principles andthat receipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and
(3) Provide reasonable assurance regarding prevention or timely detection ofunauthorized 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 control system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at march 312019 based on the bythe company considering the essential components of internal internalcontrol overfinancialcontrol stated financialcontrol over financial reporting issued by the Institute of theguidance note audit of internal Chartered Accountant of India.
For R SONI & COMPANY
Firm's Registration No. 130349W
Membership No. 141860
Place of Signature: Mumbai