The Members of Housing Development & Infrastructure Limited
Report on the Audit of the Standalone Financial Statements
DISCLAIMER OF OPINION
We were engaged to audit the standalone financial statements of Housing Development& Infrastructure Limited ("the Company") which comprise of the BalanceSheet as at March 31 2021 the Statement of Profit and Loss (including OtherComprehensive Income) the Statement of Changes in Equity and the Cash Flow Statement forthe year then ended and a summary of the significant accounting policies and otherexplanatory information given in the notes to the financial statements.
We do not express an opinion on the accompanying standalone financial statements of theCompany. Owing to the significance of matters described in the Basis for Disclaimer ofOpinion section of our report we ha ve been unable to obtain sufficient appropriate auditevidence to provide a basis for an audit opinion on these standalone financial statements.
BASIS FOR DISCLAIMER OF OPINION
Following amongst others are some of the important reasons because of which we werenot able to obtain sufficient and appropriate audit evidence:
1 Note from the Resolution Professional ("RP")
a. We refer to Note No. 1.1 mentioning RP's inability to compile true and fair accountsdue to reasons mentioned in the note.
2 Opening Balances as on April 01 2019
a. We refer to Note No. 1.2 regarding the opening balances as on April 012019 whereinthe RP is unable to reconcile the opening balances as on April 01 2019 with the auditedfinancial statements of the previous year ended March 312019. This is likely to have acontinuing impact on the financial statements of the subsequent years.
b. As required by SA 510 "Initial Audit Engagements - Opening Balances"the auditor is required to obtain sufficient appropriate audit evidence about whether:
opening balances contain misstatements that materially affect the currentperiod's financial statements; and
appropriate accounting policies reflected in the opening balances have beenconsistently applied in the current period's financial statements or changes thereto areproperly accounted for and adequately presented and disclosed in accordance with theapplicable financial reporting framework.
In this regard as stated in the above-mentioned note due to lack of sufficient andappropriate evidence we are unable to comment on the closing balances of the prior periodending on March 31 2019.
3. Non-Current Assets - Property Plant & Equipment
a. We refer to Note No. 2(i) regarding the assessment of impairment of the PropertyPlant and Equipment.
As per Para 9 of Ind AS 36 "An entity shall assess at the end of eachreporting period whether there is any indication that an asset may be impaired. If anysuch indication exists the entity shall estimate the recoverable amount of theasset."
In view of the uncertainty of resumption of the Company's operations the management isrequired to make an assessment of impairment to the carrying value of its assets. Pendingresolution of Corporate Insolvency Resolution Process ("CIRP") at the year endwe have been informed that the Company has not been able to perform any assessment todetermine any impairment to the carrying value of these assets. Consequently we areunable to conclude if any impairment needs to be recognized to the carrying value of theseassets and its consequential effects on the financial statements.
b. We further refer to Note No. 2(ii) regarding the difference in opening balances ofthe fixed assets as per audited financial statements for year ended March 312019 andbooks of accounts. Since no reconciliation or information is available the same has beenshown as adjustments in the said Note and therefore we are unable to comment on the same.
4. Investments in Property
a. We refer to Note No. 3(i) regarding investments made by the Company in immovableproperty amounting to INR 10350.67 lakhs. We have not been provided with any detailsownership documents or any supporting information with respect to the said investments.
b. Further Para 9 of Ind AS 36 states that "An entity shall assess at the endof each reporting period whether there is any indication that an asset may be impaired ifany such indication exists the entity shall estimate the recoverable amount of theasset."
However for the financial year under audit due to absence of sufficient informationthe Company has not assessed any of the above investments for mpairment.
c. The Company has not valued the said investments at Fair Value as per therequirements of the Indian Accounting Standards.
5. Non-Current Investments
a. We refer to Note No. 4(i) regarding investments made by the Company in subsidiariesand shares amounting to INR 78884.99 lakhs. We have not been provided with any detailsownership documents or any supporting information with respect to the said investments.
b. Para 9 of Ind AS 36 states that "An entity shall assess at the end of eachreporting period whether there is any indication that an asset may be impaired. If anysuch indication exists the entity shall estimate the recoverable amount of theasset." However we refer to Note No. 4(ii) stating that for the financial yearunder audit due to absence of sufficient information the Company has not assessedinvestments amounting to INR 48936.24 lakhs for impairment.
c. We further refer to Note No. 4(ii) stating that the Company has not valued the saidinvestments at Fair Value as per the requirements of the Indian Accounting Standards.
d. We further refer to Note No. 4(iv) regarding the non-availability of auditedfinancial statements of the subsidiaries and associates of the Company. Due to the absenceof such statements the Company has not been able to prepare the consolidated financialstatements of the group for the financial year ending March 312020 as well as March312021.
6. Other Non-Current Financial Assets
a. We refer to Note No. 5(i) regarding guarantee obligation commission amounting to INR777.08 lakhs. Details and documents relating to such commission were not provided to usfor verification and therefore we cannot comment on the same.
a. RP has stated that physical verification of the inventory has been carried out atthe time of taking charge of the Company and the discrepancies to the extent ascertainedhave been adjusted in the books by making appropriate provisions at the relevant year end.In absence of any further information said provision is continued for the year ended March312021.
b. We refer to note No. 6(i) regarding inventory wherein the RP has stated thatphysical verification of the inventory has been carried out at the time of taking chargeof the Company. The quantitative records of inventory maintained by the Company did notmatch with its books of accounts and the discrepancies to the extent ascertained havebeen adjusted in the books by making appropriate provisions in the previous financialyear.
c. The Company has made a provision of INR 833933.26 lakhs towards work-in-progressin the previous financial year. However due to non-availability of sufficientinformation we are unable to comment on the adequacy of such provisions.
8. Current Investments
a. We refer to Note No. 7(i) regarding investments made by the Company in partnershipfirms amounting to INR 101.58 lakhs. We have not been provided with any details ownershipdocuments or any supporting information with respect to the said investments.
b. Para 9 of Ind AS 36 states that "An entity shall assess at the end of eachreporting period whether there is any indication that an asset may be impaired. If anysuch indication exists the entity shall estimate the recoverable amount of theasset." However we refer to Note No. 7(ii) stating that for the financial yearunder audit due to absence of sufficient information the Company has not assessed any ofthe above investments for impairment.
c. We further refer to Note No. 7(ii) stating that the Company has not valued the saidinvestments at Fair Value as per the requirements of the Indian Accounting Standards.
d. We further refer to Note No. 7(iii) regarding the non-availability of auditedfinancial statements of the partnership firms. Due to absence of such statements theCompany has been unable to prepare the consolidated financial statements of the group forthe financial year ending March 312020 and March 31 2021.
9. Trade Receivables
The Company has made a provision of INR 178051.08 lakhs towards doubtful debts duringthe previous financial year. However due to non-availability of sufficient informationwe are unable to comment on the adequacy of such provisions.
10. Cash and Cash Equivalents
a. We refer to Note No. 9(i) regarding the difference in physical cash when compared tothe books of accounts. No physical cash was available in the Main Cash Book and ImprestCash to Employees as against the book balance of INR 39.16 lakhs and INR 27.92 lakhsrespectively. Further in the case of Petty Cash Book due to the onset of COVID-19 thephysical balance as on March 312021 could not be verified by the RP. However when thephysical verification was done on July 292020 the physical cash was found short by INR0.29 lakhs.
Thus out of the total cash on hand of INR 67.62 lakhs an amount of INR 67.37 lakhswas not physically available in the Company. Since the reason for the difference could notbe ascertained no effect of the same has been given in the accounts.
b. We refer to Note No. 9(ii) regarding bank balances totaling to INR 300.41 lakhs. TheCompany has not received Bank statements for accounts having aggregate balances of INR262.30 lakhs.
c. We refer to Note No. 9(iii) regarding the only operational Bank A/c with ICICI Bankis reconciled and the remaining non-operational accounts with various banks wherein thebalance aggregates to INR 262.30 lakhs could not be reconciled.
d. We refer to Note No. 9(iv) regarding the non-availability of balance confirmationsfrom the banks for any of the accounts maintained in the name of the Company.
e. Owing to the above limitations we are unable to express an opinion on cash &cash equivalents and the receipts and payments transactions during the year.
11. Other Bank Balances
a. We refer to Note No. 10(i) regarding encashment of Fixed Deposits by the erstwhilepromoters. Out of the total deposits the erstwhile promoters encashed deposits amountingto INR 11888.86 lakhs on August 192019 i.e. a day before the commencement of CIRP. Theremaining deposits are seized by income tax authorities. We were not provided with anydocumentation in relation to the encashed fixed deposits and therefore we cannot commenton the same.
12. Other Current Financial Assets
a. The Company has made a provision of INR 5585.57 lakhs towards doubtful loans tosubsidiaries in the previous financial year. However due to non-availability ofsufficient information we are unable to comment on the adequacy of such provisions.
13. Other Current Assets
a. We refer to Note No. 12 regarding during earlier years advances given by theCompany to vendors amounting to INR 13398.04 lakhs and towards land purchase / tenancy /claims / development rights amounting to INR 279455.11 lakhs. However properdocumentation or balance confirmations from the parties were not available forverification.
b. The Company has made a provision of INR 13398.04 lakhs and INR 279455.11 lakhstowards doubtful advances in the previous financial year. However due to non-availabilityof sufficient information we are unable to comment on the adequacy of such provisions.
14. Equity Share Capital
We refer to Note No. 13(i) regarding the conversion of 20000000 equity sharewarrants into equity shares during the previous financial year having face value of INR2000.00 lakhs at a consideration of INR 6220.00 lakhs. The terms of conversion relatingto such issue were not available and hence could not be verified.
15. Fieserves and Surplus
The statement of changes in equity during the previous year reflects an effect of INR1153.14 lakhs towards "Other changes". However we were not provided with anydetails or information for such change and hence the same could not be verified.
16. Current Borrowings
? Term Loans and Debentures
We refer to Note No. 15 regarding Term Loans and Debentures standing in the books atINR 248109.18 lakhs and make the following observations:
a. The Corporate Insolvency Resolution Process ("CIRP") of the Companycommenced on August 202019 and the Resolution Professional took charge of the Company onAugust 26 2019. The Resolution Professional invited claims from Financial Creditors andtill March 31 2021 received financial claims from Banks and Financial Institutionstowards Term Loans Non-Convertible Debentures and Overdraft facilities amounting to INR2338533.88 lakhs (including INR 161459.46 lakhs from home buyers and towardsinvocation of corporate guarantee) INR 187876.28 lakhs from operational creditors INR61654.62 lakhs from other creditors and INR 1164.16 lakhs from the employees. Thebalances as per the books of accounts are different than the claims lodged as theinterest penal interest charges etc. charged by the bankers have not been completelyaccounted for by the erstwhile management in the books of accounts.
b. With respect to the book balance outstanding as on March 31 2020 of INR 247711.72lakhs of the said borrowings the Resolution Professional has sent requests for balanceconfirmations in accordance with SA 505 "External Confirmations" to theconcerned parties for the previous year but he has not received any confirmations.Consequently we cannot comment on the actual liabilities in relation to these borrowings
c. Ind AS adjustments relating to unwinding of finance cost required to be madehowever owing to the non-availability of relevant documents and calculations the saidadjustment if any has not been made. Hence we are unable to comment on the same.
17. Trade Payables
We refer to Note No. 16(ii) regarding expenses worth INR 1812.67 lakhs which have beenaccounted in the previous years but the same have not been credited to the respectivevendor's personal accounts. They are reflected in the control accounts maintained by theCompany under "Other Trade Payables"
18. Other Current Financial Liabilities
a. We refer to Note No. 17(i) regarding dues to employees of INR 1605.77 lakhs. Basedon enquiries and information obtained from the Company it is noted that there is anunreconciled difference of INR 136.00 lakhs between salary payable as per books and salarypayable as per physical records maintained by the HR department of the Company.
b. We refer to Note No. 17(ii) regarding "Provisions for OutstandingExpenses" amounting to INR 190.07 lakhs during the previous financial year. TheCompany has not revised its estimates to reflect the correct position of the saidprovisions due to lack of proper information about the same.
19. Other Current Liabilities
a. We refer to Note No. 18 regarding outstanding balances of advances for more than ayear received from customers towards Land Units TDR FSI Advance Rental Maintenanceand other purposes amounting to INR 191985.33 lakhs. In case of these advances we arenot able to comment whether the same can be treated as deposits under section 73 or underany other applicable Rules of the Companies Act 2013.
b. We refer to Note No. 18(i) regarding the advances received by the Company towardsrental income since F.Y. 2010-11 totaling to INR 262.47 lakhs. Such advances have not beenappropriated towards the rental income in any of the subsequent years and there is noexplanation for the same.
c. We refer to Note No. 18(ii) regarding statutory dues of INR 2286.49 lakhs whichinclude an amount of INR 693.76 lakhs payable towards Service Tax and VAT includinginterest relating to earlier years. However we have not received any information ordetails for the same from the Company.
d. We refer to Note No. 18(ii) regarding dues towards Tax Deducted at Source (TDS) TaxCollected at Source (TCS) Provident Fund ESIC Profession Tax and Goods & ServicesTax (GST) totaling to INR 925.99 lakhs which are outstanding in the books of accounts ofthe Company. During the year the Company has not made payment towards such dues in full.However no provisions have been made towards interest or penalties payable ori suchliabilities .
e. We have not received any workings calculations or statements as to how the figuresupto March 312020 are arrived at.
20. Current Provisions
a. We refer to Note No. 19(i) regarding provision for Gratuity and Leave encashmentamounting to INR 944.50 lakhs.
b. As per Para 66 of Ind AS 19 - "Employee Benefits"
In order to measure the present value of the post-employment benefit obligations andthe related current service cost it is necessary:
(a) to apply an actuarial valuation method;
(b) to attribute benefit to periods of service; and
(c) to make actuarial assumptions
However during the year due to lack of appropriate information the Company has notbeen able to obtain an actuarial valuation as required under the provisions of Ind AS 19.Hence the provisions have been made based on the estimates of earlier years.
21. Current Tax Liabilities
a. We refer to Note No. 20 regarding income tax provisions pertaining from A.Y. 2010-11to A.Y. 2019-20 amounting to INR 17417.01 lakhs. We are given to understand that theResolution Professional was unable to gather relevant information excepting the demandnotices mentioned in (b) below. Owing to the unavailability of information and documentswe are unable to comment on the status of Income tax liabilities and the correspondingAdvance tax payments.
b. We have been provided with Notices for Demand from the Income Tax Departmenttotaling to INR 4351.00 lakhs. However the same could not be verified since relevant andappropriate information was not available.
22. Revenue and Other Income:
a. We refer to Note No. 22(i) regarding lease rental income of INR 85.38 lakhs to whichcertain Ind AS adjustments required have not been made. We have not been provided withany details or documents for to the same.
b. We refer to Note No. 22(ii) regarding the policy of revenue recognition. As per theAccounting Policy mentioned in the financials for F.Y. 2018-19 the Company has statedthat for ongoing projects it followed "Project Completion Method" which is adeviation from the requirement of Ind AS 18 which prescribes the "Percentage ofCompletion Method". This is not in line with the requirements of Ind AS 18.
23. Related Party Transactions:
We refer to Note No. 32(i) regarding related party transactions entered into by theCompany. Related party transactions are disclosed only to the extent information is madeavailable to the RP and hence the same could be verified only to the same extent.
24. Ongoing investigations:
The Company is faced with certain on-going investigations initiated by governmentalauthorities such as Enforcement Directorate (ED) Economic Offences Wing (EOW) SeriousFraud Investigation Office (SFIO) and Central Bureau of Investigation (CBI). Flowever theoutcome of such investigations and its effect on the financial statements cannot beascertained as of now.
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. Wehave determined the matters described below to be the key audit matters to be communicatedin our report.
For each matter below our description of how our audit addressed the matter isprovided in that context.
We have fulfilled the responsibilities described in the Auditor's responsibilities forthe audit of the financial statements section of our report including in relation tothese matters. Accordingly our audit included the performance of procedures designed torespond to our assessment of the risks of material misstatement of the financialstatements. The results of our audit procedures including the procedures performed toaddress the matters below provide the basis for our audit opinion on the accompanyingfinancial statements.
1. Uncertainties regarding recoverability of work in progress (inventory) loans andadvances given and investments made by the Company:
The Company is having gross work in progress of INR 1099047.13 lakhs which issupposed to represent the projects undertaken by the Company that are not yet finished orsold.
The Company is having loans and advances of INR 298443.17 lakhs which have been givento inter alia its related entities.
The Company is having investments in property subsidiaries and associates amounting toINR 59286.90 lakhs.
Considering the amount involved uncertainty associated with the outcome of the CIRPand significant management judgement in its recoverability this was considered to be akey audit matter in the audit of the standalone financial statement.
Our audit procedures included amongst others the following:
Obtaining an understanding of the management process for assessing therecoverability of work in progress loans and advances and investments.
Discussed extensively with the present management regarding steps taken forrecovering the amounts and evaluated the provisions to be made for the projects whosevalue is substantially not recoverable.
Assessed that the disclosures made by the present management are in accordancewith applicable accounting standards.
2. Litigations and investigations:
The Company is subject to assessment by various government authorities including taxauthorities on various matters resulting into litigations disputes and unresolvedinquiries. Moreover there are numerous civil litigations and proceedings against theCompany lodged with various judicial authorities which are as on the date of this reportundecided.
The tax matters involve significant amounts which are at various stages of litigationsand the proceedings take significant time to resolve. Proceedings related to other mattersare still under process and the outcome of the same is unknown. Accordingly we haveidentified this as a key audit matter
Our audit procedures included amongst others the following:
Obtained list of indirect tax litigations from the present management.
Discussed the matters with the present management to understand the possibleoutcome of these disputes
Assessed contingent liability disclosures in Note 31 to the accompanyingstandalone financial statements.
MATERIAL UNCERTAINTY RELATED TO GOING CONCERN
As mentioned in Note No. 1.1 to the financial statements the Company has been referredto National Company Law Tribunal under the Insolvency and Bankruptcy Code 2016 (theCode) and there is considerable decline in level of operations of the Company and networth of the Company as on the reporting date is negative and it continues to incurlosses. The Company is a co-obligor and has received demand notices in respect ofborrowings of other obligors / borrowers. Since Corporate Insolvency Resolution Process(CIRP) is currently in progress as per the Code it is required that the Company bemanaged as a going concern during CIRP. Accordingly the financial statements arecontinued to be prepared on going concern basis. However there exists a materialuncertainty about the ability of the Company to continue as a "Going Concern".The same is dependent upon the resolution plan to be approved by the Hon'ble NationalCompany Law Tribunal. The appropriateness of the preparation of financial statements ongoing concern basis is critically dependent upon CIRP as specified in the Code. Necessaryadjustments required on the carrying amount of assets and liabilities are notascertainable at this stage.
RESPONSIBILITIES OF MANAGEMENT AND THOSE CHARGED WITH GOVERNANCE FOR PREPARATION OFFINANCIAL STATEMENTS
The Company's Board of Directors / Resolution Professional is responsible for thematters stated in section 134(5) of the Companies Act 2013 ("the Act") withrespect to the preparation of these financial statements that give a true and fair view ofthe financial position financial performance changes in equity and cash flows of theCompany in accordance with the Ind AS and other accounting principles generally acceptedin India. This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding of the assets of the Companyand for preventing and detecting frauds and other irregularities; selection andapplication of appropriate accounting policies; making judgments and estimates that arereasonable and prudent; and design implementation and maintenance of adequate internalfinancial controls that were operating effectively for ensuring the accuracy andcompleteness of the accounting records relevant to the preparation and presentation ofthe financial statements that give a true and fair view and are free from materialmisstatement whether due to fraud or error.
In preparing the financial statements the Board of Directors / Resolution Professionalis responsible for assessing the Company's ability to continue as a going concerndisclosing as applicable matters related to going concern and using the going concernbasis of accounting unless the Board of Directors / Resolution Professional / Managementeither intends to liquidate the Company or to cease operations or has no realisticalternative but to do so.
The Board of Directors / Resolution Professional are responsible for overseeing theCompany's financial reporting process.
However in case of the Company the Hon'ble National Company Law Tribunal MumbaiBench vide its order dated August 20 2019 superseded the Board of Directors of theCompany and appointed the Resolution Professional thereby commencing the CorporateInsolvency Resolution Process. The Resolution Professional is responsible among otherthings to run the Company as a "going concern". Accordingly the standalonefinancial statements for the year ended March 312021 have been prepared on going concernassumptions.
RESPONSIBILITIES OF THE AUDITOR FOR THE AUDIT OF THE FINANCIAL STATEMENTS
Our responsibility is to conduct an audit of the Company's standalone financialstatements in accordance with Standards on Auditing and to issue an auditor's report.However because of the matters described in the Basis for Disclaimer of Opinion sectionof our report we were not able to obtain sufficient appropriate audit evidence to providea basis for an audit opinion on these standalone financial statements.
We are independent of the Company in accordance with the ethical requirements inaccordance with the requirements of the Code of Ethics issued by ICAI and the ethicalrequirements as prescribed under the laws and regulations applicable to the Company.
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 thematters specified in paragraphs 3 and 4 of the Order.
2. As required by Section 143(3) of the Act we report that:
(a) Because of the reasons mentioned in the "Basis for Disclaimer of Opinion"para above we were unable to obtain all the information and explanations which to thebest of our knowledge and belief were necessary for the purposes of our audit.
(b) Due to the possible effects of the matters individually and cumulativelydescribed in the "Basis for Disclaimer of Opinion" para above we are unable tocomment whether proper books of account as required by law have been kept by the Company.
(c) The Balance Sheet the Statement of Profit and Loss the Statement of Changes inEquity and the Cash Flow Statement dealt with by this Report are in agreement with therelevant books of account as maintained. As mentioned in 2(b) above we are unable tocomment whether the books of accounts are proper.
(d) Because of the possible effects of the matters mentioned in the "Basis ofDisclaimer of Opinion" para above and owing the general lack of information wecannot form an opinion whether the aforesaid financial statements comply with the Ind ASspecified under Section 133 of the Act read with Rule 7 of the Companies (Accounts)Rules 2014.
(e) Since we were not able to obtain a written confirmation from the erstwhileDirectors we are unable to comment whether the directors are disqualified from beingappointed in terms of Section 164(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". We have disclaimed our opinion on theCompany's internal financial controls over financial reporting.
(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. The Company has more than five hundred pending litigations and due tonon-availability of adequate information it is not possible to quantify the same.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no dues which were required to be transferred to Investor Education andProtection Fund by the Company.
For Dayal and Lohia
Firm Regin. No. 102200W
Date: January 31 2022
UDIN : 22031626AAAABR7972
"ANNEXURE A" TO THE INDEPENDENT AUDITORS REPORT
The annexure referred to our Report of even date to the members of HousingDevelopment and Infrastructure Limited on the financial statements for the year endedMarch 312021. We report that:
1. In respect of its Fixed assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situations of fixed assets on the basis of available information;
b) The Resolution Professional has clarified that he has not been able to carry outphysical verification of all the fixed assets owned by the Company and therefore hecannot comment whether there are any material discrepancies in physical assets whencompared with the records.
c) As per the financial statements presented to us the Company owns lands amounting toINR 11298.00 lakhs. We have received for verification the ownership documents signifyingthe ownership of the Company on such lands.
2. The Resolution Professional has informed us that the physical verification of theinventory was carried out at the time of taking charge by the Interim ResolutionProfessional. The discrepancies only to the extent ascertained have been adjusted in thebooks by making appropriate provisions.
3. According to the information and explanations given to us the Company has grantedunsecured loans to its group companies amounting to INR 4705.21 lakhs during the earlieryears.
a) Owing to the absence of sufficient and appropriate evidence we cannot commentwhether the conditions of the grant of such loans are prejudicial to the interests of theCompany;
b) Based on the information received from the Company no stipulations with respect toany schedule of repayment have been entered into.
c) Since there are no due dates for the repayment of loans given to group companiesthis clause is not applicable.
4. During the year the Company has not entered into transactions with entities in whichthe directors are interested.
5. According to the information and explanation given to us the Company has receivedadvances in earlier years outstanding for more than one year towards Land Units TDRFSI Advance Rental Maintenance and other purposes amounting to INR 191985.33 lakhs.However due to lack of sufficient information we are unable to comment whether the samecan be treated as deposits under section 73 or under any other applicable Rules of theCompanies Act 2013.
6. Since the Company is engaged in real estate development as defined under para 5(a)of Schedule VI of the Companies Act 2013 the Company is required to maintain cost recordsunder section 148(1) of the said Act. However based on the inquiries made and responsesobtained from the Resolution Professional the Company has not made or maintained suchCost Records.
7. a) Based on the books of accounts undisputed statutory dues including ProvidentFund Employees' State Insurance Income-tax Sales tax Service tax Customs Duty ExciseDuty Value Added Tax Cess Goods and Services Tax and other material statutory dues asapplicable have not been regularly deposited with the relevant authorities and there havebeen significant delays in a large number of cases. Undisputed amounts payable in respectthereof which were outstanding at the year-end are as follows:
|Particulars of Dues ||Amount (in INR Lakhs) |
|Provident Fund ||594.44 |
|E.S.I.C. ||13.21 |
|Profession Tax ||27.04 |
|Tax Deducted at Source and Tax Collected at Source ||925.99 |
|Value Added Tax ||120.31 |
|Goods and Services Tax ||(315.45) |
|Service Tax ||572.02 |
The above-mentioned figures have been taken from the books of accounts of the Company.However we were not provided with proper supporting documents or information to verifythe same.
b) As per records produced before us and explanations given to us and on the basis ofour examination of the records of the Company details of dues of Income-tax Service taxDuty of Customs and Value added tax which have not been deposited as on March 312021 onaccount of disputes are given below:
|Year ||Particulars of Dues ||Amount involved (in INR Lakhs) |
|2011-12 ||Professional Tax ||114.90 |
|2017-18 ||Professional Tax ||27.20 |
|2018-19 ||Professional Tax ||13.74 |
|2018-19 ||E.S.I.C. Dues ||6.85 |
|2018-19 ||E.S.I.C. Dues ||0.08 |
|2018-19 ||E.S.I.C. Dues ||0.18 |
|2018-19 ||E.S.I.C. Dues ||5.03 |
|2016-17 ||Provident Fund ||749.81 |
|2015-16 ||Maharashtra Value Added Tax ||362.15 |
|2017-18 ||Maharashtra Value Added Tax ||265.55 |
|2015-16 ||Maharashtra Goods & Service Tax ||607.54 |
|2009-10 to 2018-19 ||Income Tax ||14606.90 |
8. Based on our audit procedures and on the basis of information and explanations givento us we are of the opinion that during the year the Company being under the CIRPprocess its liability for repayment of principal and interest to banks financialinstitutions & debenture-holders stands abated. Hence the question of default inrepayment does not arise.
9. In our opinion and on the basis of information and explanations given to us theCompany has not raised money by way of further public offer or term loans during the year.
10. According to the information and explanations given to us there are severalongoing investigations against the Company which have been initiated by differentgovernment departments. Since the above-mentioned investigations are not yet concluded weare unable to comment whether any fraud on or by the Company has been committed during theearlier years. However we have not come across any incidence of fraud committed on or bythe Company during the year.
11. Based on our examination of the books of accounts and according to the informationand explanations given to us during the year the Company has not paid managerialremuneration to the its Key Managerial Personnel and therefore the provisions of Section197 read with Schedule V of the companies Act 2013 are not applicable.
12. In our opinion and according to information and explanations given to us theCompany is not a Nidhi Company. Accordingly paragraph 3(xii) of the Order is notapplicable.
13. Due to the possible cumulative effects of the reasons mentioned in the "Basisfor Disclaimer of Opinion" para above and in absence of an authentic list of relatedparties we are unable to comment whether the transactions with related parties are inaccordance with section 177 and 188 of the Act and whether details of such transactionshave been disclosed in Financial Statements as required by applicable accountingstandards.
14. According to the information and explanation given to us during the year theCompany has not made preferential allotment or private placement of shares or fully orpartly convertible debentures.
15. According to the information and explanation given to us during the year theCompany has not entered into any non-cash transactions with directors or persons connectedwith them.
16. In our opinion and according to the information and explanations given to us theCompany is not required to be registered under section 45-IA of Reserve Bank of India Act1934.
For Dayal and Lohia
Firm Regn. No. 102200W
Date: January 31 2022
ANNEXURE - B' TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THE FINANCIALSTATEMENTS OF HOUSING DEVELOPMENT AND INFRASTRUCTURE LIMITED
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 (the Act')
We were engaged to audit the internal financial controls over financial reporting of HousingDevelopment and Infrastructure Limited ("the Company") as of March 312021in conjunction with our audit of the standalone financial statements of the Company forthe 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 Reportingissued by the Institute of Chartered Accountants of India ('ICAI'). 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 financialcontrols over financial reporting based on our audit conducted in accordance with theGuidance Note on Audit of Internal Financial Controls Over Financial Reporting (the"Guidance Note") and the Standards on Auditing to the extent applicable to anaudit of internal financial controls both issued by the Institute of CharteredAccountants of India.
Because of the matter described in Disclaimer of Opinion paragraph below we were notable to obtain sufficient appropriate audit evidence to provide a basis for an auditopinion on internal financial controls system over financial reporting of the Company.
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) pertains 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 statements in accordance with generally accepted accountingprinciples and thatreceipfe and
expenditures of the Company are being made only in accordance with authorizations ofmanagement 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.
Basis for Disclaimer of Opinion
Because of the cumulative effect of the reasons described in the basis for disclaimeropinion paragraph of our main report it can be concluded that the Company has notestablished adequate internal financial controls and that whatever financial controls havebeen established were not operating effectively. While reference may be made to theaforesaid Paragraph amongst others the following significant aspects of materialweaknesses in internal control system are particularly noteworthy:
The quantitative records of inventory maintained by the Company did not matchwith its books of accounts.
The confirmations of balances of secured and unsecured loans trade receivablestrade and other payables and loans and advances are not available.
The Company had not made any assessment of impairment of fixed assets loans andadvances and other assets as at the balance sheet date.
The Company's internal control process in respect of closure of outstandingentries in Bank Reconciliation Statements are not adequate.
The Company's internal financial control with regard to compliance with theapplicable Indian Accounting Standards and evaluation of carrying values of assets andliabilities and other matters as explained in the basis for disclaimer of opinion of ourmain report resulting in the Company not providing for adjustments which are required tobe made to the standalone financial statements.
With respect to the operations of the Company prior to the commencement of theCIRP the internal controls could not be tested and therefore we are unable to comment onthe same.
A material weakness' is a deficiency or a combination of deficiencies ininternal financial control over financial statements such that there is a reasonablepossibility that a material misstatement of the Company's financial statements will not beprevented or detected on a timely basis.
Disclaimer of Opinion
Because of the significance of the matters described in the Basis for DisclaimerOpinion paragraph above we are unable to obtain sufficient appropriate audit evidence toprovide a basis for our opinion whether the Company had adequate internal financialcontrols over financial reporting and whether such internal financial controls wereoperating effectively during the year. Accordingly we do not express an opinion on theCompany's internal financial controls over financial reporting.
We have considered the disclaimer reported above in determining the nature timing andextent of audit tests applied in our audit of the standalone financial statements of theCompany for the year ended March 31 2021 and this report affects our report datedJanuary 31 2022 which expresses a disclaimer of opinion on the standalone financialstatements of the Company.
For Dayal and Lohia
Firm Regn. No. 102200W
M. No.: 31626
Date: January 31 2022