To the Members of
J. Kumar Infraprojects Limited
Report on Financial Statements Opinion
We have audited the accompanying Ind AS financial statements of J. KumarInfraprojects Limited ("the Company") which comprise the Balance Sheet asat March 31 2020 and the Statement of Profit and Loss (including other comprehensiveincome) statement of cash flows and statment of change in equity for the year then endedand a summary of significant accounting policies and other explanatory information.
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Ind AS financial statements give the information required bythe Companies Act 2013 (the Act'') in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in India ofthe state of affairs of the Company as at March 31 2020 and its profit includingcomprehensive income changes in equity and its cash flows for the year ended on thatdate.
Basis for Opinion
We conducted our audit of the Ind AS financial statements in accordance with theStandards on Auditing (SAs) specified under section 143(10) of the Companies Act 2013.Our responsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Ind AS Financial Statements section of our report.We are independent of the Company in accordance with the Code of Ethics issued by theInstitute of Chartered Accountants of India together with the ethical requirements thatare relevant to our audit of the Ind AS financial statements under the provisions of theCompanies Act 2013 and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the Code of Ethics. We believethat the audit evidence we have obtained is sufficient and appropriate to provide a basisfor our opinion on the Ind AS financial statements.
Emphasis of Matters
We draw attention to Note 3 (d) of the standalone financial statement in which thecompany describes the uncertainties arising from the COVID 19 pandemic. Our report is notmodified in respect of this matter.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the Ind AS financial statements of the current period. Thesematters were addressed in the context of our audit of the Ind AS financial statements as awhole and in forming our opinion thereon and we do not provide a separate opinion onthese matters.
|Revenue recognition - accounting for construction contracts |
|Key Audit Matter Description ||There are significant accounting judgment including estimation of costs to complete determining the stage of completion and the timing of revenue recognition. The Company recognises revenue and profit/loss on the basis of stage of completion based on the proportion of contract costs incurred at balance sheet date relative to the total estimated costs of the contract at completion. The recognition of revenue and profit/loss therefore rely on estimates in relation to total estimated costs of each contract. Cost contingencies are included in these estimates to take into account specific uncertain risks or disputed claims against the Company arising within each contract. These contingencies are reviewed by the Management on a regular basis throughout the contract life and adjusted where appropriate. The revenue on contracts may also include variable consideration (variations and claims). Variable consideration is recognised when the recovery of such consideration is highly probable. Refer to Note Number 2.2(g) Summary of significant accounting policies - "Revenue Recognition" of the Financial Statements |
|Principal Audit Procedures ||Our procedures included: Testing of the design and implementation of controls involved for the determination of the estimates used as well as their operating effectiveness; |
| || Testing the relevant information technology systems' access and change management controls relating to contracts and related information used in recording and disclosing revenue in accordance with the new revenue accounting standard; |
| || Testing a sample of contracts for appropriate identification of performance obligations; |
| || For the sample selected reviewing for change orders and the impact on the estimated costs to complete; |
| || Engaging technical experts to review estimates of costs to complete for sample contracts; and |
| || Performed analytical procedures for reasonableness of revenues disclosed by type and service offerings |
|Evaluation of uncertain tax positions |
|Key Audit Matter Description ||The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. Refer to Note Number 2.2 (l) and (m) -Summary of significant accounting policies - "Taxes on Income" and "provisions Contingent liabilities contingent assets and Commitments" of the Financial Statements |
|Principal Audit Procedures ||Our procedures included the following: |
Obtained understanding of key uncertain tax positions;
| || Obtained details of completed tax assessments and demands for the year ended March 31 2020 from the management; |
| || We along with our internal tax experts - |
i. Discussed with appropriate senior management and evaluated the Management's underlying key assumptions in estimating the tax provision;
| ||ii. Assessed management's estimate of the possible outcome of the disputed cases; and |
| ||iii. Considered legal precedence and other rulings in evaluating management's position on these uncertain tax positions. |
Information Other than the Ind AS Financial Statements and Auditor's Report thereon
The Company's management and Board of Directors are responsible for the otherinformation. The other information comprises the information included in the Company'sAnnual Report but does not include the Ind AS financial statements and our auditors'report thereon.
Our opinion on the Ind AS financial statements does not cover the other information andwe do not express any form of assurance conclusion thereon.
In connection with our audit of the Ind AS financial statements our responsibility isto read the other information and in doing so consider whether the other information ismaterially inconsistent with the financial statements or our knowledge obtained in theaudit or otherwise appears to be materially misstated. If based on the work we haveperformed we conclude that there is a material misstatement of this other information weare required to report that fact. We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the Ind ASFinancial 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 Ind AS financial statements that give a true and fair view of the financialposition financial performance including other comprehensive income cash flow andchanges in equity and cash flows of the Company in accordance with the accountingprinciples generally accepted in India including the Indian Accounting Standardsspecified under section 133 of the Act read with the companies (Indian accountingstandards) Rules 2015 as amended. This responsibility also includes maintenance ofadequate accounting records in accordance with the provisions of the Act for safeguardingof the assets of the Company and for preventing and detecting frauds and otherirregularities; selection and application of appropriate accounting policies; makingjudgments and estimates that are reasonable and prudent; and design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the accuracy and completeness of the accounting records relevant to thepreparation and presentation of the Ind AS financial statements that give a true and fairview and are free from material misstatement whether due to fraud or error.
In preparing the Ind AS financial statements the Board of Directors 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 Ind AS Financial Statements
Our objectives are to obtain reasonable assurance about whether the Ind AS financialstatements as a whole are free from material misstatement whether due to fraud or errorand to issue an auditor's report that includes our opinion. Reasonable assurance is a highlevel of assurance but is not a guarantee that an audit conducted in accordance with SAswill always detect a material misstatement when it exists. Misstatements can arise fromfraud or error and are considered material if individually or in the aggregate theycould reasonably be expected to influence the economic decisions of users taken on thebasis of these Ind AS 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 Ind AS financialstatements whether due to fraud or error design and perform audit procedures responsiveto those risks and obtain audit evidence that is sufficient and appropriate to provide abasis for our opinion. The risk of not detecting a material misstatement resulting fromfraud is higher than for one resulting from error as fraud may involve collusionforgery intentional omissions misrepresentations or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the entity hasadequate internal financial controls system in place and the operating effectiveness ofsuch 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 in preparation of Ind AS financial statements and based on the auditevidence obtained whether a material uncertainty exists related to events or conditionsthat may cast significant doubt on the appropriateness of this assumption. If we concludethat a material uncertainty exists we are required to draw attention in our auditors'report to the related disclosures in the Ind AS financial statements or if suchdisclosures are inadequate to modify our opinion. Our conclusions are based on the auditevidence obtained up to the date of our auditors' report. However future events orconditions may cause the company to cease to continue as a going concern.
Evaluate the overall presentation structure and content of the Ind AS financialstatements including the disclosures and whether the Ind AS financial statementsrepresent the underlying transactions and events in a manner that achieves fairpresentation.
We communicate with those charged with governance of the Company regarding among othermatters the planned scope and timing of the audit and significant audit findingsincluding any significant deficiencies in internal control that we identify during ouraudit.
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 Ind AS financial statements ofthe current period and are therefore the key audit matters. We describe these matters inour auditors' report unless law or regulation precludes public disclosure about the matteror 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.
We did not audit the financial statements and other information of 19 Joint operationsincluded in the financial statements of the Company whose financial statements/financialinformation reflect total assets of Rs 101153.53 Lakh (without inter companyelimination) as at March 31 2020 and total revenue of Rs 200860.46 Lakh (without intercompany elimination) and total profit after tax(net) of Rs 1601.62 Lakh (without intercompany elimination) for the year ended on that date as considered in the financialstatements.
The financial information of 6 joint operations have been audited by the other auditorswhose reports have been furnished to us by the management and for remaining 13 jointoperations whose financial information reflect total assets of Rs 3147.30 Lakh (withoutinter company elimination) as at March 31 2020 and total revenues of Rs 536.36 Lakh(without inter company elimination) and total profit after tax (net) of Rs 12.33 Lakh(without inter company elimination) un-audited Financial information and Accountscertified by the management have been furnished to us by the management and our opinionin so far as it relates to the amounts and disclosures included in respect of these jointoperations and our report in terms of subsection (3) of section 143 of the Act in so faras it relates to the aforesaid joint operations is based solely on the report of suchother auditors and Accounts certified by the management.
Our opinion on the Ind AS financial statements and our report on Other Legal andRegulatory Requirements below is not modified in respect of these matters.
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 subsection (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 Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
d) In our opinion the aforesaid financial statements comply with the AccountingStandards specified under Section 133 of the Act read with Rule 7 of the Companies(Accounts) Rules 2014.
e) On the basis of the written representations received from the directors as on March312020 taken on record by the Board of Directors none of the directors is disqualifiedas on March 31 2020 from being appointed as a director in terms of Section 164(2) of theAct.
f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
g) With respect to the other matters to be included in the auditor's report inaccordance with the requirements of section 197(16) of the Act as amended in our opinionto the best of our information and according to the explanations given to us theremuneration paid by the company to its directors during the year is in accordance withthe provision of section 197 of the Act.
h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its Ind AS financial statements;
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long term contracts includingderivative contracts.
iii. There has been no delay in transferring amounts required to be transferred tothe Investor Education and Protection Fund by the Company.
Annexure "A" to the Independent Auditors' Report
With reference to the Paragraph 1'' referred to in the IndependentAuditors' Report to the members of the Company on the financial statements for the yearended March 31 2020 we report the following:
i. In respect of the Company's property plant and equipment:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of property plant and equipment.
b) The Company has a program of verification to cover all the items of property plantand equipment in a phased manner at regular intervals which in our opinion is reasonablehaving regard to the size of the Company and the nature of its property plant andequipment. Pursuant to the program certain property plant and equipment were physicallyverified by the management during the year. According to the information and explanationsgiven to us no material discrepancies were noticed on such verification.
c) According to the information and explanations given to us the records examined byus and based on the examination of the conveyance deeds / registered sale deed provided tous we report that the title deeds comprising all the immovable properties of land andbuildings which are freehold are held in the name of the Company as at the balance sheetdate.
In respect of immovable properties of land and building that have been taken on leaseand disclosed as property plant and equipment in the financial statements the leaseagreements are in the name of the Company.
ii. The inventory has been physically verified by the management during the year. Inour opinion the frequency of such verification is reasonable. The Company has maintainedproper records of inventory. The discrepancies noticed on verification between thephysical stock and the book records were not material.
iii. According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms or other parties listed inthe register maintained under Section 189 of the Companies Act 2013. Accordingly theprovisions of clause 3(iii)(a) (b) and (c) of the Order are not applicable to theCompany.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of Sections 185 and 186 of the Act in respect ofgrant of loans making investments and providing guarantees and securities as applicable.
v. The Company has not accepted any deposits from the public within the meaning ofsection 73 to 76 of the Act and the rules framed there under.
vi. We have reviewed the cost records maintained by the Company pursuant to theCompanies (Cost Records and Audit) Rules 2014 prescribed by the Central Government underSection 148 (1) of the Companies Act 2013 and are of the opinion that primafacie theprescribed cost records have been maintained. We have however have not made a detailedexamination of the records with a view to determine whether they are accurate or complete.However Cost Audit has been prescribed for the company and cost audit has been conductedby the Cost Auditor.
vii. According to the information and explanations given to us in respect of statutorydues:
a) The Company has generally been regular in depositing undisputed statutory duesincluding Provident Fund Employees' State Insurance Income Tax Goods and Service TaxCustoms Duty Cess and other material statutory dues applicable to it with the appropriateauthorities.
b) There were no undisputed amounts payable in respect of Provident Fund Employees'State Insurance Income Tax Goods and Service Tax Customs Duty Cess and other materialstatutory dues in arrears as at March 31 2020 for a period of more than six months fromthe date they became payable.
c) Details of dues of Income Tax Sales Tax Service Tax Excise Duty and Value AddedTax which have not been deposited as at
March 31 2020 on account of dispute are given below:
(Amount in Lakh)
|Nature of Dues ||Period to which the amount relates ||Forum where dispute is pending ||Disputed Amount ||Amount paid under protest |
|Income Tax ||2011-12 ||Tribunal ||4.73 ||4.73 |
|Income Tax ||2012-13 ||Tribunal ||2.58 ||2.58 |
|Income Tax ||2013-14 ||Tribunal ||12.94 ||12.94 |
|Income Tax ||2014-15 ||Tribunal ||35.09 ||35.09 |
|Income Tax ||2015-16 ||Tribunal ||192.37 ||192.37 |
|Total ||247.71 ||247.71 |
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of loans or borrowings to any financialinstitutions or banks as at balance sheet date.
ix. According to the records of the company examined by us and the information andexplanation given to us the company has not raised money by way of initial public offeror further public offer (including debt instruments) / Follow-on-offer and the moneyraised by term loan of Rs 5958.50 lakh are applied for the purposes for which they areraised.
x. To the best of our knowledge and according to the information and explanations givento us no fraud by the Company or no material fraud on the Company by its officers oremployees has been noticed or reported during the year.
xi. In our opinion and according to the information and explanations given to us theCompany has paid/provided managerial remuneration in accordance with the requisiteapprovals mandated by the provisions of section 197 read with Schedule V to the Act.
xii. The Company is not a Nidhi Company and hence reporting under clause 3 (xii) of theOrder is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us theCompany is in compliance with Section 177 and 188 of the Companies Act 2013 whereapplicable for all transactions with the related parties and the details of related partytransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
xiv. During the year the Company has not made any preferential allotment or privateplacement of shares or fully or partly paid convertible debentures and hence reportingunder clause 3 (xiv) of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any noncash transactions with itsDirectors or persons connected to its directors and hence provisions of section 192 of theCompanies Act 2013 are not applicable to the Company.
xvi. The Company is not required to be registered under section 45-IA of the ReserveBank of India Act 1934.
(Referred to in paragraph 2(f) under Report on Other Legal and RegulatoryRequirements' section of our report of even date)
Report on the Internal Financial Controls under Clause (i) of sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
In conjunction with our audit of the financial statements of J. Kumar InfraprojectsLimited ("the Company") as of March 31 2020 we have audited the internalfinancial controls with reference to the financial statements of the Company.
Management's Responsibility for Internal Financial Controls
The Board of Directors of the company is responsible for establishing and maintaininginternal financial controls based on the internal control over financial reportingestablished by the company considering the essential components of internal control statedin the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting("the Guidance Note") issued by the Institute of Chartered Accountants of India("ICAI"). These responsibilities include the design implementation andmaintenance of adequate internal financial controls that were operating effectively forensuring the orderly and efficient conduct of its business including adherence to therespective entity's policies the safeguarding of its assets the prevention and detectionof frauds and errors the accuracy and completeness of the accounting records and thetimely preparation of reliable financial information as required under the Act.
Our responsibility is to express an opinion on the internal financial controls withreference to financial statements of the Company based on our audit. We conducted ouraudit in accordance with the Guidance Note and the Standards on Auditing issued by theICAI and deemed to be prescribed under Section 143(10) of the Act to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the ICAI. 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 withreference to financial statements was established and maintained and if such controlsoperated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to financial statements and theiroperating effectiveness. Our audit of internal financial controls with reference tofinancial statements included obtaining an understanding of internal financial controlswith reference to financial statements assessing the risk that a material weaknessexists and testing and evaluating the design and operating effectiveness of internalcontrol based on the assessed risk. The procedures selected depend on the auditor'sjudgment including the assessment of the risks of material misstatement of the financialstatements 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 internal financial control system withreference to financial statements of the Company.
Meaning of Internal Financial Controls with reference to Financial Statements
A company's internal financial control with reference to financial statements is aprocess designed to provide reasonable assurance regarding the reliability of financialreporting and the preparation of financial statements for external purposes in accordancewith generally accepted accounting principles.
A company's internal financial control with reference to financial statements includesthose policies and procedures that (1) pertain to the maintenance of records that inreasonable detail accurately and fairly reflect the transactions and dispositions of theassets 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
authorisations of management and directors of the company; and (3) provide reasonableassurance regarding prevention or timely detection of unauthorised acquisition use ordisposition of the company's assets that could have a material effect on the financialstatements.
Inherent Limitations of Internal Financial Controls with reference to FinancialStatements
Because of the inherent limitations of internal financial controls with reference tofinancial statements including the possibility of collusion or improper managementoverride of controls material misstatements due to error or fraud may occur and not bedetected. Also projections of any evaluation of the internal financial controls withreference to financial statements to future periods are subject to the risk that theinternal financial control with reference to financial statements may become inadequatebecause of changes in conditions or that the degree of compliance with the policies orprocedures may deteriorate.
In our opinion the Company have in all material respects an adequate internalfinancial controls system with reference to financial statements and such internalfinancial controls with reference to financial statements were operating effectively as atMarch 31 2020 based on the internal control over financial reporting criteriaestablished by the Company considering the essential components of internal control statedin the Guidance Note issued by the ICAI.
For TODI TULSYAN & CO. Chartered Accountants FRN: 002180C
DILIP KUMAR PARTNER
Membership No. 054575 UDIN : 20054575AAAADJ6817
Place : Mumbai Date : June 26 2020