To the Members of Gayatri Projects Limited
Report on the Audit of the Standalone Financial Statements
We have audited the Standalone Financial Statements of Gayatri Projects Limited("the Company") which comprise the Balance Sheet as at 31st March 2019 andthe Statement of Profit and Loss (including Other Comprehensive Income) the Statement ofChanges in Equity and the Statement of Cash Flows for the year then ended and notes tothe Financial Statements including a summary of significant accounting policies and otherexplanatory information (hereinafter referred to as "the Standalone FinancialStatements").
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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at 31st March 2019 and the Profit and othercomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) as specified under Section 143(10) of the Companies Act2013. Our responsibilities under those standards are further described in the Auditor'sResponsibilities for the Audit of the Financial Statements section of our report.
We are independent of the Company in accordance with the Code of Ethics' issuedby the Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the standalone Ind AS financial statements under theprovisions of the of the Companies Act 2013 and the Rules made thereunder and we havefulfilled our other ethical responsibilities in accordance with these requirements and theCode of Ethics. We believe that the audit evidence we have obtained is sufficient andappropriate to provide a basis for our audit opinion on the standalone Ind AS financialstatements
Emphasis of Matters
(Note Nos. referred hereunder are with reference to respective Notes forming part ofthe Standalone Financial Statements)
We draw attention to the following matters:
i) As stated in Note No. 31.19 the recovery of trade receivables is delayed for thedetailed reasons stated in the said note. Further as explained in the same note thecompany has given an irrevocable and unconditional corporate guarantee to a subsidiary ofthe associate company which has defaulted in repayment of dues to the lenders.
ii) As stated in Note No. 31.20 the amount receivable from the erstwhile associatecompany is long pending for recovery as the same is based on the receipt of claims by thesaid erstwhile associate company.
iii) As stated in Note No. 31.17 the Inter Corporate Loan grouped underNon-current Loans' and accumulated interest thereon long pending for recovery.
iv) As stated in Note No. 31.18 the work advances in respect of certain contract worksgiven to subcontractors grouped under Other Current Assets' which are long pendingfor recovery.
Our opinion is not modified in respect of above matters.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Standalone Ind AS Financial Statements for the year ended31st March 2019. These matters were addressed in the context of our audit of theStandalone Ind AS Financial Statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. We have determined the mattersdescribed below to be key audit matters to be communicated in our report.
|S.no. ||Key Audit Matter ||Audit Process |
|1. ||Revenue recognition and measurement of contract assets in respect of unbilled amounts ||We have obtained the procedure and process involved in estimating the percentage of completion of the projects. |
| ||The management of the company has applied significant judgement in determining the revenue to be recognised in case of performance obligation satisfied over a period of time; revenue recognition is done by measuring the progress towards complete satisfaction of performance obligation. ||We have also obtained and verified the costs incurred on the project/works up to the reporting date for the revenues accounted in respect of works on sampling basis. |
| ||Revenue is recognized on fixed price construction contracts in accordance with the percentage of completion basis which necessarily involve technical estimates of the percentage of completion and costs to completion of each contract / activity on the basis of which profits and losses are accounted. ||We have also obtained the certified copies (i.e percentage of completed work approved by the relevant authorities) of works executed till the reporting date in respect of revenues accounted on sampling basis. |
| ||When the outcome of the contract is ascertained reliably contract revenue is recognized at cost of work performed on the contract plus proportionate margin using the percentage of completion method. Percentage of completion is the proportion of cost of work performed up to the date to the total estimated contract costs. ||We have also performed analytical procedures for reasonableness of revenues recognised. |
| || ||We have also verified the reasonableness of the estimation of remaining costs to be incurred to complete the project / work and profit / loss estimated in the project / work. |
| ||The stage of completion of contracts is measured by reference to the proportion that contract costs incurred for work performed up to the reporting date bear to the estimated total contract costs for each contract. Further at the reporting date revenue is accrued for costs incurred against work performed and which are not billed and further measurement of work completed/cost incurred during the period for recognition of unbilled revenue. ||Reviewed the delivery and collection history of customers against whose contracts un-billed revenue is recognised Tested relevant contracts for measurement of work completed during the period for unbilled revenue. |
| ||Accordingly the above have been determined as key audit matters. || |
|2. ||Carrying Value of Investments in Gayatri Energy Ventures Private Limited (GEVPL) || Obtained and read the financial statements of GEVPL to identify if any disclosure is made for impairment of assets in its standalone financial statements. |
| ||The management regularly reviews whether there are any indicators of impairment on unquoted investments made by the company. Accordingly the management had identified impairment indicators in GEVPL a wholly owned subsidiary of the company with an equity investment of Rs.639.83 crores and anunsecured loan of Rs. 130.86 crores. (Refer Note No 31.23 of the Financial statements ) || Obtained the impairment indicator assessment performed by the management. |
| || || We have obtained the management's understanding with regard to impairment of the investments made in loss making subsidiary company. |
| ||As per Ind AS 36 - Impairment of Assets' the standard is applicable to financial assets classified as subsidiaries. || |
| ||In case of GEVPL the existence of an impairment indicator is significantly influenced by whether there is an impairment to the underlying investment in power project made by the said company. || We have obtained the company's management opinion in estimating the realisable value of the investments made by the subsidiary company. |
| ||This assessment involves significant judgment especially in relation to determination of expected future economic benefits. || |
| ||Accordingly the evaluation of impairment of investments in GEVPL was determined to be a key audit matter || |
|3 ||Settlement agreement entered between the company GHL and IL&FS Financial Services Limited || Obtained and read the settlement agreement entered between the company GHL and IL&FS Financial Services Limited |
| ||During the year the company has entered into a settlement agreement dated 29th March 2019 made between the Company Gayatri Highways Limited ("GHL") an Associate Company and IL&FS Financial Services Limited (IL&FS) the Company and GHL jointly and severally agreed to repay the loan availed by GHL amounting to Rs.125 crores along with interest in twelve monthly instalments commencing from May 2019. Accordingly it has been determined as a key audit matter. || Assessed the impact of the same in the standalone financial statements. |
| || || Review of disclosure made by the company in the financial statements in this regard. |
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 total comprehensive income changes in equity and cashflows of the Company in accordance with the accounting principles generally accepted inIndia including the Indian Accounting Standards (Ind AS) specified under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules 2015 as amended.This responsibility also includes maintenance of adequate accounting records in accordancewith the provisions of the Act for safeguarding of the assets of the Company and forpreventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the StandaloneFinancial Statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the Standalone Financial Statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessthe 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 Standalone 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. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements 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 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 Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when 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")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" a statement on the mattersspecified in paragraphs 3 and 4 of the Order to the extent applicable.
2) As required by Section 143(3) of the Act we report that:
a) We have sought and obtained all the information and 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 including other ComprehensiveIncome the Statement of Changes in Equity and the statement of Cash Flow dealt with bythis Report are in agreement with the books of account.
d) In our opinion the aforesaid standalone Ind AS financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Companies (IndianAccounting Standards) Rules 2015 as amended;
e) On the basis of the written representations received from the directors as on31stMarch 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 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. As stated in Note no. 31.2of the Standalone Financial Statements the Company hasdisclosed the impact of pending litigations on its financial position in its StandaloneFinancial Statements.
ii. As per the information and explanations given by the Company the Company did nothave any long-term contracts including derivative contracts for which there were anymaterial foreseeable losses.
iii. As per the information and explanations given by the Company there has been nodelay in transferring the amounts which are required to be transferred to InvestorEducation & Protection Fund.
for M O S & Associates LLP
Firm Registration No.: 001975S/S200020
S V C Reddy
Membership Number: 224028
Date: 30th May 2019
ANNEXURE A TO THE AUDITORS' REPORT
The Annexure referred to in the Independent Auditors' Report to the members of theCompany on the Standalone Financial Statements for the year ended 31st March 2019 wereport that:
(i) In respect of Fixed Assets:
a. In our opinion and as per the information and explanations given to us the Companyhas maintained proper records showing particulars including quantitative details andsituation of fixed assets;
b. The management of the company has 68 verified the fixed assets at reasonableintervals during the year. According to the information and explanations given to us nomaterial discrepancies were noticed on such physical verification.
c. According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
(ii) According to the information and explanations given to us the inventories havebeen physically verified during the year by the management. In our opinion the frequencyof such verification is reasonable. The discrepancies noticed on physical verification ofinventories as compared to the book records which in our opinion were not material havebeen properly dealt with.
(iii) According to information and explanations given to us the Company has grantedunsecured Loans of Rs.32077.58 lakhs to parties covered in the Register maintained undersection 189 of the Companies Act 2013. In respect of such loans
a. In our opinion and according to information and explanations given to us the termsand conditions of such loans given by the Company are not prima facie prejudicial to theinterest of the company.
b. The Schedule of repayment of the principal and interest has not been stipulated asthe principal amount is repayable on demand.
c. There is no repayment schedule and therefore there is no overdue amount.
(iv) According to information and explanations given to us and in our opinion thecompany has complied with the provisions of sections of 185 and 186 of the Act to theextent applicable in respect of grant of loans making investments and providingguarantees and securities.
(v) According to the information and explanations given to us the Company has notaccepted any deposits from public within the meaning of Sections 73 to 76 of the Act andthe Companies (Acceptance of Deposits) Rules 2014 (as amended) during the year.Accordingly the provisions of clause 3(v) of the Order are not applicable to the Company.
(vi) We have broadly reviewed the cost records maintained by the Company pursuant tothe Companies (Cost Records and Audit) Rules 2014 as amended and prescribed by theCentral Government under section 148(1) of the Companies Act 2013 and are of the opinionthat prima facie the prescribed cost records have been made and maintained. We havehowever not made a detailed examination of the cost records with a view to determinewhether they are accurate or complete.
(vii) In respect of statutory dues
a. According to the information and explanations given to us and based on ourexamination of records of the Company the company has been generally regular indepositing amounts deducted/ accrued in the books of accounts in respect of statutory duesincluding provident fund value added tax cess and other material statutory dues exceptincome tax and goods and service tax for which there have been delays in few cases.
b. According to the information and explanations given to us no undisputed amountspayable in respect of provident fund employees' state insurance income-tax service taxsales-tax goods and service tax duty of custom duty of excise value added tax Cessand other material statutory dues were outstanding at the year end for a period of morethan six months from the date they became payable except as given below;
|Name of the statute ||Nature of Dues ||Period to which the amount relates ||Amount involved Rs. in Lakhs |
|Income Tax Act 1961 ||TDS ||2018-19 ||160.50 |
|Jharkhand Value Added Tax Act 2005 ||VAT ||2017-18 ||21.21 |
c. According to the information and explanation given to us there are no dues of Salestax Income Tax Wealth Tax Service Tax Customs Duty Goods and Service Tax and Cesswhich have not been deposited as on 31st March 2019 on account of any dispute except thefollowing:
|Sl. No. ||Name of the Statute ||Name of the Tax Due ||Forum where Dispute is pending ||Amount Rs. in Lakhs ||Financial Years |
|1 ||Mines and Minerals (Development and Regulation) Act 1957 ||Department of Mines and Geology ||Supreme Court ||1043.51 ||1998-99 |
|2 ||Central Sales Tax Act 1956 and Sales Tax Acts of Various States ||Sales Tax/Vat ||Appeals pending before High Courts of respective states and Appellate Tribunals and other appropriate authorities. ||3436.55 ||2001-02 and 2004-05 to 2009-10 |
|3 ||Central Excise Act 1944 ||Service Tax ||Appeals pending before various Authorities ||1770.10 ||2007-08 to 2011-12 |
(viii) Based on our audit procedures and according to the information and explanationsgiven to us we are of the opinion that the Company has not defaulted in repayment ofloans or borrowings to any financial institution bank or Government as on the BalanceSheet date. However as stated in note no. 14.7 and 18.1 Interest on borrowings for themonth March 2019 amounting to Rs.1801.72 lakhs is due on balance sheet date.
(ix) According to information and explanations given to us the company has not raisedmoneys by way of public offer (including debt instruments). Based on our audit proceduresand according to the information and explanations given to us in our opinion the Termloans availed by the Company were prima facie applied for the purpose for which theywere obtained.
(x) During the course of our examination of the books and records of the companycarried out in accordance with the generally accepted auditing practices in India andaccording to the information and explanations given to us we have neither come across anyinstance of material fraud by the company or on the company by its officers or employeesnoticed or reported during the year nor we have been informed of any such case by themanagement.
(xi) In our opinion and according to the information and explanations given to us thecompany has paid or provided for managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the Act.
(xii) As the Company is not a Nidhi Company provisions of clause 3(xii) of the Orderare not applicable to the Company.
(xiii) According to the information and explanations given to us and based onexamination of records of the Company transactions with related parties are in complianceof Sections 177 and 188 of the Act where applicable and details of such transactions havebeen disclosed in the Standalone Financial Statements as required by the applicableAccounting Standards.
(xiv) According to the information and explanations give to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentor private placement of shares or fully or partly convertible debentures and hencereporting under clause (xiv) of the order is not applicable to the company.
(xv) According to the information and explanations given to us and based on examinationof records of the Company the Company has not entered into any non-cash transaction withdirectors or persons connected with them. Hence Clause 3(xv) of the Order is notapplicable for the current year under report.
(xvi) The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934 and accordingly the provisions of Clause 3(xvi) of the Order arenot applicable to the Company.
| ||for M O S & Associates LLP |
| ||Chartered Accountants |
| ||Firm Registration No.: 001975S/S200020 |
| ||Sd/- |
| ||S V C Reddy |
|Place: Hyderabad ||Partner |
|Date: 30th May 2019 ||Membership Number: 224028 |
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 GayatriProjects Limited ("the Company") as of 31st March 2019 in conjunction with ouraudit of the Standalone Financial Statements of the Company for the year ended on thatdate.
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 Reportingissued by the Institute of Chartered Accountants of India (ICAI'). 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 Company's policies the safeguarding ofits 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.
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 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 controls operated 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 procedures selected depend on the auditor's judgment including the assessment ofthe risks of material misstatement of the financial statements whether due to fraud orerror.
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 Standalone Financial Statements for external purposes in accordance withgenerally accepted accounting principles. A company's internal financial control overfinancial reporting includes those policies and procedures that (1) pertain to themaintenance of records that in reasonable detail accurately and fairly reflect thetransactions and dispositions of the assets of the company; (2) provide reasonableassurance that transactions are recorded as necessary to permit preparation of StandaloneFinancial Statements in accordance with generally accepted accounting principles and thatreceipts and expenditures of the company are being made only in accordance withauthorizations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorized acquisition use ordisposition of the company's assets that could have a material effect on the StandaloneFinancial 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 adequate internal financialcontrols system over financial reporting with reference to these Standalone FinancialStatements and such internal financial controls over financial reporting were operatingeffectively as at 31st March 2019 based on the internal control over financial reportingcriteria established by the Company considering the essential components of internalcontrol stated in the Guidance Note on Audit of Internal Financial Controls Over FinancialReporting issued by the Institute of Chartered Accountants of India.
| ||for M O S & Associates LLP |
| ||Chartered Accountants |
| ||Firm Registration No.: 001975S/S200020 |
| ||Sd/- |
| ||S V C Reddy |
|Place: Hyderabad ||Partner |
|Date: 30th May 2019 ||Membership Number: 224028 |