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Hubtown Ltd.

BSE: 532799 Sector: Infrastructure
NSE: HUBTOWN ISIN Code: INE703H01016
BSE 00:00 | 20 Sep 15.05 -0.05
(-0.33%)
OPEN

15.00

HIGH

15.70

LOW

14.95

NSE 00:00 | 20 Sep 15.20 0.05
(0.33%)
OPEN

15.00

HIGH

15.50

LOW

14.85

OPEN 15.00
PREVIOUS CLOSE 15.10
VOLUME 6152
52-Week high 58.30
52-Week low 11.68
P/E
Mkt Cap.(Rs cr) 109
Buy Price 15.00
Buy Qty 300.00
Sell Price 15.50
Sell Qty 10.00
OPEN 15.00
CLOSE 15.10
VOLUME 6152
52-Week high 58.30
52-Week low 11.68
P/E
Mkt Cap.(Rs cr) 109
Buy Price 15.00
Buy Qty 300.00
Sell Price 15.50
Sell Qty 10.00

Hubtown Ltd. (HUBTOWN) - Auditors Report

Company auditors report

TO THE MEMBERS OF HUBTOWN LIMITED

Report on the Standalone Financial Statements

We have audited the accompanying standalone financial statements of HUBTOWN LIMITED(‘the Company') which comprise the Balance Sheet as at 31st March 2018 thestatement of Profit and loss (including other comprehensive income) the cash _owstatement and the statement of Changes in Equity for the year then ended and a summary ofthe significant accounting policies and other explanatory information.

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 state ofaffairs (financial position) Profit or loss (financial performance including othercomprehensive income) cash _ows and changes in equity of the Company in accordance withthe accounting principles generally accepted in India including the Indian AccountingStandards (‘Ind AS') specified under Section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe Act for safeguarding the assets of the Company and for preventing and detecting fraudsand other irregularities; selection and application of appropriate accounting policies;making judgments and estimates that are reasonable and prudent; and design implementationand maintenance of adequate internal financial controls that were operating effectivelyfor ensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the standalone financial statements that give a true andfair view and are free from material misstatement whether due to fraud or error.

Auditor's Responsibility

Our responsibility is to express an opinion on these standalone financial statementsbased on our audit. We have taken into account the provisions of the Act the accountingand auditing standards and matters which are required to be included in the audit reportunder the provisions of the Act and the Rules made thereunder.

We conducted our audit in accordance with the Standards on Auditing specified underSection 143(10) of the Act. Those Standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetherthese standalone financial statements are free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts andthe disclosures in the financial statements. The procedures selected depend on theauditors' judgement including the assessment of the risks of material misstatement of thefinancial statements whether due to fraud or error. In making those risk assessments theauditor considers internal financial control relevant to the Company's preparation of thefinancial statements that give a true and fair view in order to design audit proceduresthat are appropriate in the circumstances. An audit also includes evaluating theappropriateness of the accounting policies used and the reasonableness of the accountingestimates made by the Company's Directors as well as evaluating the overall presentationof the financial statements.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our qualified audit opinion on the standalone financialstatements.

Basis for Qualified Opinion

(a) As stated in Footnote (a) to Note 28 to the standalone financial statements of theCompany for the year with regards the Company not having provided for Interest amountingto Rs 4162.00 Lakhs on certain Inter-corporate deposits including reversal of interestin current quarter amounting to Rs 2561.57 Lakhs provided in a previous quarter's.Consequent to above finance cost for the quarter and year ended 31st March 2018 has beenunderstated by Rs 2561.57 and Rs 4162.00 Lakhs respectively resulting in a consequentialincrease in the Profit for the quarter and year ended 31st March 2018.

(b) As stated in Footnote (c) Note 23 to the standalone financial statements of theCompany for the year with regards the company not having recognized

finance Income from Deep Discount bond held in one of its Joint Venture entities.Consequently Finance Income and Profit for the year has been understated by Rs 18508.44Lakhs.

Qualified Opinion

In our opinion and to the best of our information and according to the explanationsgiven to us except for the effects of the matter described in the Basis for QualifiedOpinion paragraph above the aforesaid standalone financial statements give theinformation required by the Act in the manner so required and give a true and fair view inconformity with the accounting principles generally accepted in India of the state ofaffairs of the Company as at 31st March 2018 and its Profit/loss and its cash _ows forthe year ended on that date.

Emphasis of Matters

We draw attention to:

(a) Note 2 (II) (b) (i) to the standalone financial statements regarding recognition ofexpense and income for ongoing projects which is based upon estimated project costs asper the judgement of the management which have been relied upon by us these beingtechnical matters.

(b) Footnote to Note 17 of standalone financial results regarding the company has notcreated investments to the extent of 15% of the value of the such debentures which isrequired to be created and earmarked in the manner prescribed under Rule 18(7)(c) of theCompanies (Share Capital and Debentures) Rules 2014 notified by the Ministry of CorporateAffairs.

(c) Footnote (a) to Note 13 to the standalone financial statements regarding the statusof the projects and the opinion framed by the Company's management regarding realizablevalue of the costs incurred on the projects which being a technical matter is reliedupon by us.

(d) Not e 36 (i) (B) to the standalone financial statements regarding Corporateguarantees issued and securities provided aggregating Rs 98457.50 lakhs by the Company tobanks and financial institutions on behalf of various entities as at 31st March 2018which are significant in relation to the Profits for the year and the net worth of theCompany. In the opinion of the Management these are not expected to result into anyfinancial liability to the Company. (e) Footnote (c) to Note 36 of the standalonefinancial statements regarding the above corporate guarantees issued and securitiesprovided are disclosed at amounts outstanding as at 31st March 2018. The financialliabilities on account of such financial guarantee contracts have not been measured atfair value as management is of the opinion that there is no material bene_t which isexpected to accrue to the borrowers on behalf of whom the company has provided thecorporate guarantees. (f) Footnote (b) to Note 36 of the standalone financial statementsregarding reliance placed by the auditors on certification received from the managementwith regard to the disclosure of contingent liabilities of the Company.

(g) Note 42 of the standalone financial statements regarding balances that are subjectto confirmations reconciliation and adjustments if any.

(h) Footnote (a) to Note 19 of the standalone financial results regarding theCompany's default in redemption of non-convertible debentures along with interestamounting to Rs 2199 lakhs. We are however informed by the management that the company isin the process of negotiation for settlement / redemption of the said debentures.

(i) Footnote (c) to Note no. 9 of the standalone financial statements regarding thecompany not having charged interest on advances given by it to various group entitiesdeveloping real estate projects in which the Company has a commercial and businessinterest.

(j) Footnote (f) to Note 6 of the standalone financial statements regarding theCompany's investments in certain subsidiaries joint ventures and associates as at 31stMarch 2018 which have incurred losses and carry an eroded net worth as at 31st March2018.

Our opinion is not qualified in respect of the above matters. Other Matters

Attention is further invited to:

1. The Statement of Profit and Loss of the Company which includes share of Profit frominvestments in partnership firms / joint ventures aggregating

Rs 325.47 lakhs that are based on the financial statements of the firms/joint venturesprepared by the management and presented to us on which we have relied.

2. The audited standalone financial statements for the year ended 31st March 2017 wascarried out and reported by Dalal Doshi & Associates vide their unmodified auditreport dated 29th May 2017 whose report has been furnished to us by the management andwhich has been relied upon by us for the purpose of our audit of the standalone financialstatements.

Our opinion is not qualified in respect of the above matter.

Report on Other Legal and Regulatory Requirements

I. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of section 143(11) of the Act we givein the Annexure "A" a statement on the matters specified in paragraphs 3and 4 of the Order; II. As required by Section 143 (3) of the Act we report that: (a) Wehave sought and obtained all the information and explanations which to the best of ourknowledge and belief were necessary for the purposes of our audit.

(b) In our opinion proper books of accounts 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 Cash Flow Statement and the Statement of Changes in Equity dealt with by thisReport are in agreement with the relevant books of accounts.

(d) In our opinion the aforesaid standalone financial statements comply with theIndian Accounting Standard specified under Section 133 of the Act. (e) On the basis of thewritten representations received from the directors taken on record by the Board ofDirectors none of the directors is disqualified as on 31st March 2018 from beingappointed as a Director in terms of Section 164 (2) of the Act; (f) With respect to theadequacy of the internal financial controls over financial reporting of the Company andthe operating effectiveness of such controls refer to our separate Report in Annexure"B"; and (g) With respect to the other matters to be included in theAuditor's Report in accordance with Rule 11 of the Companies (Audit and Auditors) Rules2014 (as amended) in our opinion and to the best of our information and according to theexplanation given to us: i. The Company has disclosed the impact of pending litigations onits financial position in its standalone financial statements. ii. The Company did nothave any long term contracts including derivative contracts for which there were anymaterial foreseeable losses. iii. There has been no delay in transferring amountsrequired to be transferred to the Investor Education and Protection Fund by the Company.

For M H DALAL & ASSOCIATES
Firm Registration No.: 112449W
Chartered Accountants
DEVANG DALAL
Partner
Membership No.:109049
Place: Mumbai
Date: May 29 2018

ANNEXURE "A" REFERRED TO IN OUR REPORT TO THE MEMBERS OF HUBTOWN LIMITED ONTHE STANDALONE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31st MARCH 2018;

On the basis of such checks as we considered appropriate and in terms of theinformation and explanations given to us we state that: -(i) (a) The Company hasmaintained proper records showing full particulars including quantitative details andsituation of fixed assets.

(b) The fixed assets have been physically verified by the Management in a phasedmanner designed to cover all the items over a period of three years which in ouropinion is reasonable having regard to the size of the Company and nature of its assets.Pursuant to the program a portion of the fixed assets has been physically verified by themanagement during the year and no material discrepancies between the book records and thephysical fixed assets have been noticed.

(c) the title deeds of immovable properties are held in the name of the Company.

(ii) The physical verification of inventory has been conducted at reasonable intervalsby the Management during the year. The discrepancies noticed on physical verification ofinventory as compared to book records were not material and have been appropriately dealtwith in the books of accounts; (iii) The Company has granted unsecured loan to one companycovered under the register maintained under Section 189 of the Act; (a) The terms andcondition of the loan are prima facie not prejudicial to the interest of the Company and(b) The schedule of repayment of principal and interest has been stipulated as per termsof the arrangement; (c) As per the terms and conditions of the arrangement the amount ofthe loan is not overdue; (iv) In our opinion and according to the information andexplanations given to us the Company has complied with the provisions of Sections 185 and186 of the Companies Act 2013 in respect of the loans and investments made andguarantees and security provided by it; (v) The Company has not accepted any depositsduring the year from the public within the meaning of Sections 73 to 76 of the Act and theRules framed thereunder to the extent notified; (vi) Pursuant to the rules made by theCentral Government of India the Company is required to maintain cost records as specifiedunder Section 148(1) of the Act. We have broadly reviewed the cost records maintained bythe Company in respect of projects and are of the opinion that prima facie theprescribed accounts and records have been made and maintained. We have not however madea detailed examination of the records with a view to determine whether they are accurateor complete; (vii) (a) According to the information and explanations given to us and therecords of the Company examined by us in our opinion except for dues in respect ofIncome Tax Provident Fund Profession Tax Tax Deducted at Source Value Added Tax Goodsand Service Tax and Service Tax the Company is generally regular in depositing undisputedstatutory dues including Employees' State Insurance Wealth Tax duty of customs dutyof excise and other material statutory dues as applicable with the appropriateauthorities. The extent of arrears of statutory dues outstanding including Interest as atthe Balance Sheet date for a period exceeding six months from the date they becamepayable are Rs 1316.75 lakhs relating to Income Tax Deducted at Source Rs 11.86 lakhsrelating to Provident Fund Rs 111.99 lakhs relating to Value Added Tax Rs 173.82relating to Works Contract Tax and

Rs 156.84 lakhs relating to Service Tax;

(b) According to the information and explanations given to us and the records of theCompany examined by us the particulars of dues of Income Tax Value Added Tax and ServiceTax as at the Balance Sheet date which have not been deposited on account of a disputeare as follows:

Statute and nature of dues Financial Year Amount (Rs in lakhs) Forum where dispute is pending
Income Tax Act 1961
Income Tax 2003-04 17.48 Mumbai High Court
Income Tax 2004-05 21.31 Mumbai High Court
Income Tax 2005-06 20.92 Mumbai High Court
Maharashtra Value Added Tax Act 2002
Maharashtra Value Added Tax 2006-07 1.64 Joint Commissioner of Sales Tax (Appeals)
Service Tax
(Finance Act1994)
Service Tax 2011-12 481.60 Commissioner of Service Tax
Service Tax 2012-13 451.00 Commissioner of Service Tax
Service Tax 2013-14 520.83 Commissioner of Service Tax
Service Tax 2014-15 727.52 Commissioner of Service Tax

(viii) On the basis of the records examined by us and the information and explanationsgiven to us the Company has delayed in repayment of dues to banks financial institutionand debentures holders. Attention is invited to footnote "e" to Note 18 –Non-Current Borrowings with regards to banks footnote "e" to Note 18 –Current Borrowings with regards to financial institution and footnote "b" toNote 19 with regards to debentures for the amounts and period of delays in payment ofprinciple and interest thereon; (ix) In our opinion and according to the information andexplanations given to us the term loans have been applied on an overall basis for thepurposes for which they were obtained;

(x) D uring the course of our examination of the books and records of the Companycarried out in accordance with the generally accepted auditing practice 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 have we been informed of any such case by themanagement. Attention is however invited to Note 36(ii)(c) to accounts in connection witha commercial transaction with an erstwhile associate company; (xi) Based upon the auditprocedures performed and the information and explanations given by the management themanagerial remuneration has been paid or provided in accordance with the requisiteapprovals mandated by the provisions of Section 197 read with Schedule V to the CompaniesAct 2013; (xii) As the Company is not a Nidhi company the provisions of clause 3(xii) ofthe Order are not applicable to the Company; (xiii) The company has entered intotransactions with related parties in compliance with the provisions of section 177 and 188of the Act. The details of such related party transactions have been disclosed in thestandalone financial statements as required by the applicable accounting standards; (xiv)The Company has not made any preferential allotment or private placement of shares orfully or partly convertible debentures during the year. Accordingly the provision ofclause 3(xiv) of the Order are not applicable to the Company; (xv) Based upon the auditprocedures performed and the information and explanations given by the management theCompany has not entered into any non-cash transactions with directors or persons connectedwith them. Accordingly the provisions of clause 3(xv) of the Order are not applicable tothe Company; (xvi) The Company is not required to be registered under Section 45 IA of theReserve Bank of India Act 1934 and accordingly the provisions of clause 3(xvi) of theOrder are not applicable to the Company.

For M H DALAL & ASSOCIATES
Firm Registration No.: 112449W
Chartered Accountants
DEVANG DALAL
Partner
Membership No.:109049
Place: Mumbai
Date: May 29 2018

"ANNEXURE B" TO THE INDEPENDENT AUDITOR'S REPORT OF EVEN DATE ON THESTANDALONE FINANCIAL STATEMENTS OF HUBTOWN LIMITED

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 HubtownLimited ("the Company") as of March 31 2018 in conjunction with our audit ofthe 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 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 e_cient conduct of itsbusiness including adherence to the Company's policies the safeguarding of its assetsthe prevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Act.

Auditors' Responsibility

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") issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under section 143(10) of the Act to the extentapplicable to an audit of internal financial controls. Those Standards and the GuidanceNote require that we comply with ethical requirements and plan and perform the audit toobtain reasonable assurance about whether adequate internal financial controls overfinancial 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 risks. Theprocedures selected depend on the auditor's judgment including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.

We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.

Meaning of Internal Financial Controls over Financial Reporting

A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A company's internal financial control over financialreporting includes those policies and procedures that;

(1) pertain to the maintenance of records that in reasonable detail accurately andfairly reffect 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 that receipts and expenditures of the company are being made only inaccordance with authorizations 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.

Opinion

In our opinion the Company has in all material respects an adequate internalfinancial controls system over financial reporting and such internal financial controlsover financial reporting were operating effectively as at March 31 2018 based on theinternal controls over financial reporting criteria established by the Company consideringthe essential components of internal control stated in the Guidance Note on Audit ofInternal Financial Controls over Financial Reporting issued by the Institute of CharteredAccountants of India.

For M H DALAL & ASSOCIATES
Firm Registration No.: 112449W
Chartered Accountants
DEVANG DALAL
Partner
Membership No.:109049
Place: Mumbai
Date: May 29 2018