To the Members of
Kamanwala Housing Construction Limited
Report on the Audit of Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Kamanwala HousingConstruction Limited ("the Company") which comprise the Balance Sheet as atMarch 31 2021 the Statement of Profit and Loss(including other comprehensive income)Statement of changes in Equity and Cash Flow Statement for the year then ended and notesto the Financial Statements including a summary of significant accounting policies andother explanatory information ( hereinafter referred to as "the Standalone FinancialStatements".)
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid Standalone Financial Statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theIndian Accounting Standards prescribed under section 133 of the Companies Act 2013("the Act") read with the Companies (Indian Accounting Standards) Rules 2015as amended ("Ind AS") and other accounting principles generally accepted inIndia of the state of affairs of the Company as at March 31 2021 and its profits(including other comprehensive income) changes in equity and its cash flows for the yearended on that date.
Basis for Opinion
We conducted our audit of the Standalone Financial Statements in accordance with theStandards on Auditing (SAs) specified under Section 143(10) of the Act. Ourresponsibilities under those Standards are further described in the Auditor'sResponsibilities for the Audit of the Standalone Financial Statements section of ourreport. We are independent of the Company in accordance with the Code of Ethics issued bythe Institute of Chartered Accountants of India together with the ethical requirementsthat are relevant to our audit of the Standalone Financial Statements under the provisionsof the Act and the Rules thereunder and we have fulfilled our other ethicalresponsibilities in accordance with these requirements and the ICAI's Code of Ethics. Webelieve that the audit evidence we have obtained is sufficient and appropriate to providea basis for our opinion on the Standalone Financial Statements.
Key Audit Matters
Key audit matters ('KAM') are those matters that in our professional judgment were ofmost significance in our audit of the standalone financial statements of the currentperiod. These matters were addressed in the context of our audit of the standalonefinancial statements as a whole and in forming our opinion thereon and we do not providea separate opinion on these matters. We have determined the matter described below to bethe key audit matter to be communicated in our report.
|The Key Audit Matter ||How the matter was addressed in our audit |
|1. Evaluation of uncertain tax positions: - ||Our audit procedures included the following: |
|The Company has material uncertain tax positions including matters under dispute which involves significant judgment to determine the possible outcome of these disputes. || Obtained details of completed tax assessments and demands for the year ended March 312021 from management. |
|There are pending litigations which has been mentioned in Note no. 40 - a) to c) to the Standalone Ind AS Financial Statements. || Discussed with appropriate senior Management and evaluated Management's underlying key assumptions in estimating the tax provisions. |
|The litigations are with respect to dues of income tax sales tax which has not been deposited by the company on account of disputes. || Assessed management's estimate of the possible outcome of the disputed cases. |
| || Assessed the reason behind the pending litigations. |
| || Based on our procedures we also considered the adequacy of disclosures in respect of pending litigations and it is disclosed accordingly. |
|2. Recoverability of investments in and loans / advances given to certain associates and Joint ventures and other Parties: ||Our audit procedures included the following: |
|The Company has investments in certain associates and joint ventures with a carrying value of Rs.43.50 Lakhs. During the Financial Year the Company has written off an amount of Rs.25.50 Lakhs from investments in Joint Venture. || We have obtained and read Management's assessment for identification of indicators of impairment. |
|These parties have either been incurring losses or has pending litigation and therefore dues are overdue. Assessment of the recoverable amount of the investments in and loans/advances including interest thereon has been identified as a key audit matter due to: || We performed test of controls over impairment process through inspection of evidence of performance of these controls. |
| Significance of the carrying amount of these balances. || Assessed the impairment assessment made by the management and the assumptions used with particular attention understanding the legal dispute commercial prospects of the assets/projects. |
| The calculation of certain credit provisions for the Company is inherently judgmental. Impairment provisions (identified and unidentified) may not reflect recent developments in credit quality. || |
| The assessment requires management to make significant estimates concerning the estimated future cash flows qualitative assessments of the status of the project and its future depending on balance work to be performed or approvals to be received and growth rates based on management's view of future business prospects. || |
| Changes to any of these assumptions could lead to material changes in the estimated recoverable amount impacting both potential impairment charges and also potential reversals of impairment taken in prior years. || |
|3. Loans and advances to HDIL: ||Our audit procedures included the following: |
|The Company had provided loans and advances to HDIL which was written down to Rs. 1205.60 Lakhs out of which an amount of Rs. 606.20 lakhs have only been admitted as claim of the Company by the Resolution Professional of HDIL. The Management has decided to write off the remaining amount of Rs. 599.40 lakhs as sundry balance written off and the Management expects to recover the amount of Rs. 606.201akhs being claim admitted by the Resolution Professional of HDIL. ||We have obtained and verified the list of Claims from Operational Creditors admitted by the Resolution Professional of HDIL as on 13th August 2020. Accordingly the claim of the Company has been admitted in the category of operational creditors amounting to Rs. 606.20 Lakhs. |
| ||Further we have verified that the Management has written off the balance amount of Rs. 599.40 lakhs during the financial year under audit. |
Information other than the Financial Statements and Auditor's Report thereon
The Company's Board of Directors is responsible for the other information. The otherinformation comprises the information included in the Company's Annual Report but does notinclude the Standalone Financial Statements and our Auditors' Report thereon.
Our opinion on the Standalone Financial Statements does not cover the other informationand we do not express any form of assurance conclusion thereon.
In connection with our audit of the Standalone Financial Statements our responsibilityis to read the other information and in doing so consider whether the other informationis materially inconsistent with the Standalone Financial Statements or our knowledgeobtained during the course of audit or otherwise appears to be materially misstated. Ifbased on the work we have performed we conclude that there is a material misstatement ofthis other information we are required to report that fact. We have nothing to report inthis regard.
Responsibilities of Management and Those Charged with Governance for the StandaloneFinancial Statements
The Company's Board of Directors is responsible for the matters stated in Section134(5) of the Act with respect to the preparation of these Standalone Financial Statementsthat give a true and fair view of the state of affairs (financial position) profit orloss (financial performance including other comprehensive income) changes in equity andcash flows of the Company in accordance with the accounting principles generally acceptedin India including the Ind AS specified under Section 133 of the Act. This responsibilityalso includes maintenance of adequate accounting records in accordance with the provisionsof the Act for safeguarding of the assets of the Company and for preventing and detectingfrauds and other irregularities; selection and application of appropriate accountingpolicies; making judgments and estimates that are reasonable and prudent; and designimplementation and maintenance of adequate internal financial controls that wereoperating effectively for ensuring the accuracy and completeness of the accountingrecords relevant to the preparation and presentation of the financial statements thatgive a true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the Standalone Financial Statements management and Board of Directors areresponsible 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 management either intends to liquidate the Company or to ceaseoperations or has no realistic alternative but to do so.
Board of Directors is also responsible for overseeing the Company's financial reportingprocess.
Auditors' Responsibilities for the Audit of the Standalone Financial Statements
Our objectives are to obtain reasonable assurance about whether the StandaloneFinancial Statements as a whole are free from material misstatement whether due to fraudor error and to issue an Auditors' Report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional skepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the StandaloneFinancial Statements whether due to fraud or error design and perform audit proceduresresponsive to those risks and obtain audit evidence that is sufficient and appropriate toprovide a basis for our opinion. The risk of not detecting a material misstatementresulting from fraud is higher than for one resulting from error as fraud may involvecollusion forgery intentional omissions misrepresentations or the override of internalcontrol.
Obtain an understanding of internal control relevant to the audit in order todesign audit procedures that are appropriate in the circumstances. Under Section 143(3)(i)of the Act we are also responsible for expressing our opinion on whether the company hasadequate internal financial controls system in place with reference to StandaloneFinancial Statements in place and the operating effectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by the management.
Conclude on the appropriateness of management's use of the going concern basisof accounting and based on the audit evidence obtained whether a material uncertaintyexists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe Standalone Financial Statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditors' report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the StandaloneFinancial Statements including the disclosures and whether the Standalone FinancialStatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the Standalone Financial Statementsthat individually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Standalone Financial Statements may be influenced. Weconsider quantitative materiality and qualitative factors in (i)planning the scope of ouraudit work and in evaluating the results of our work; and (ii) to evaluate the effect ofany identified misstatements in the Standalone Financial Statements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the Standalone Financial Statementsof the current period and are therefore the key audit matters. We describe these mattersin our Auditors' Report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by the Companies (Auditors' Report) Order 2016 ("the Order")issued by the Central Government of India in terms of Section 143(11) of the Act we givein "Annexure A" a statement on the matters specified in paragraphs 3 and 4 ofthe Order.
2. As required by Section 143(3) ofthe Act based on our audit we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss (including other comprehensiveincome) the Statement of Changes in Equity and the Statement of Cash Flows dealt with bythis Report are in agreement with the relevant books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with the IndAS specified under Section 133 ofthe Act.
(e) On the basis of the written representations received from the directors as on March312021taken on record by the Board of Directors none of the directors is disqualified ason March 312021from being appointed as a director in terms of Section 164(2) ofthe Act
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in "Annexure B".
(g) With respect to the other matters to be included in the Auditors' 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 as of March 31 2021 onits financial position in its Standalone Financial Statements - Refer Note no. 40 - a) toc) to the Standalone IND AS Financial Statements.
ii. The Company did not have any long-term contracts including derivative contracts forwhich there were any material foreseeable losses.
iii. There were no amounts which were required to be transferred to the InvestorEducation and Protection Fund by the Company.
(h) With respect to the matters to be included in the Auditors' Report in accordancewith the requirements of section 197(16) ofthe Act as amended:
According to the information and explanations given to us remuneration is not paid bythe Company to its directors during the current year except the sitting fees.
"Annexure-A" to the Independent Auditor's Report
The Annexure referred to in Paragraph 1 under heading of "Report on Other Legaland Regulatory Requirements" section of our report of even date to the members ofKamanwala Housing Construction Limited ('the Company') for the year ended March 312021:
On the basis of such checks as we considered appropriate and according to theinformation and explanations given to us during the course of our audit we report that:
i. (a) The Company has maintained proper records showing full particulars includingquantitative details and situation of the fixed assets.
(b) As per the information and explanation provided to us the Company has a regularprogramme of physical verification of its fixed assets by which fixed assets are verifiedin a phased manner over a period of three years. In accordance with this programmecertain fixed assets were physically verified by the Management during the year. Accordingto the information and explanation given to us no material discrepancies were noticed onsuch verification. In our opinion this periodicity of physical verification is reasonablehaving regard to the size of the Company and the nature of its assets.
(c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the Company does not have any immovableproperty in its Fixed Assets and therefore provisions of sub-clause (c) of Clause (i) ofparagraph 3 of the order is not applicable to the Company.
ii. As per the information and explanation given to us the inventories have beenphysically verified during the year by the Management. In our opinion the frequency ofverification is reasonable. No material discrepancy was noticed on physical verificationof inventories by the management as compared to book records.
iii. According to the information and explanations given to us and on the basis of ourexamination of the books of account the Company has not granted any loans secured orunsecured to companies firms or other parties listed in the register maintained underSection 189 of the Companies Act 2013. Therefore the provisions of Clause (iii) ofparagraph 3 of the Order are not applicable to the Company.
iv. In our opinion and according to the information and explanations given to us theCompany has complied with the provisions of section 185 and 186 of the Act in respect ofloans and investments made. The company has not given any guarantees and thereforeprovisions of clause (iv) of paragraph 3 of the order in respect of guarantees is notapplicable to the Company.
v. According to the information and explanations given to us the Company has notaccepted any deposit from the public. Therefore the provisions of Clause (v) of paragraph3 of the Order are not applicable to the Company.
vi. According to the information and explanations given to us as per the Companies(Cost records and audit) Rules 2015 provisions of sub-section (1) of section 148 of theAct relating to maintenance of cost records are applicable to the Company and the Companyhas maintained the necessary records as required under the Act.
vii. (a) According to the information and explanations given to us and on the basis ofour examination of the records of the Company amounts deducted/ accrued in the books ofaccount in respect of undisputed statutory dues including provident fund income taxsales tax wealth tax service tax duty of customs value added tax and other materialstatutory dues have been regularly deposited during the year by the Company with theappropriate authorities. According to the information and explanations given to us noundisputed amounts payable in respect of provident fund income tax service tax valueadded tax and other material statutory dues were in arrears as at 31st March 2021for aperiod of more than six months from the date they became payable.
(b) According to information and explanations given to us the following dues of incometax sales tax and value added tax have not been deposited by the Company on account ofdisputes:
|Name of Statute ||Nature of dues ||Amount (Rs. In lacs) ||Period to which the amount relates (FY) ||Forum where dispute is pending |
|The MV AT Act 2002 ||Sales Tax ||20.93 ||2006-07 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||14.53 ||2007-08 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||4.64 ||2008-09 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||23.69 ||2010-11 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||74.56 ||2011-12 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||16.32 ||2014-15 ||Commissioner of Sales Tax (Appeal) |
|The MVAT Act 2002 ||Sales Tax ||31.08 ||2015-16 ||Commissioner of Sales Tax (Appeal) |
|The Income Tax Act 1961 ||Income Tax ||404.57 ||2010-11 ||Commissioner of Income Tax (Appeals) |
|The Income Tax Act 1961 ||Income Tax ||345.60 ||2014-15 ||Commissioner of Income Tax (Appeals) |
viii. In our opinion and according to the information and explanations given to us theCompany has not defaulted in repayment of dues to financial institutions bank ordebenture holders.
ix. The Company did not raise any money by way of initial public offer or furtherpublic offer (including debt instruments) and term loans during the year. Therefore theprovisions of Clause (ix) of paragraph 3 of the Order are not applicable to the Company.
x. In our opinion and according to the information and explanations given to us nomaterial fraud by the Company or on the Company by its officers or employees has beennoticed or reported during the financial year covered by our audit.
xi. According to the information and explanations given to us and based on ourexamination of the books of accounts of the Company the Company has paid / provided formanagerial remuneration in accordance with the requisite approvals mandated by theprovisions of section 197 read with Schedule V to the Act.
xii. In our opinion and according to the information and explanations given to us theCompany is not a nidhi company. Therefore the provisions of Clause (xii) of paragraph 3of the Order are not applicable to the Company
xiii. According to the information and explanations given to us and based on ourexamination of the books of account of the Company transactions with the related partiesare in compliance with sections 177 and 188 of the Act wherever applicable and detailsof such transactions have been disclosed in the Standalone Financial Statements asrequired by the applicable accounting standards and the Act.
xiv. According to the information and explanations give to us and based on ourexamination of the books of account of the Company the Company has not made anypreferential allotment or private placement of shares or fully or partly convertibledebentures during the financial year covered by our audit. Therefore the provisions ofClause (xiv) of paragraph 3 of the Order are not applicable to the Company.
xv. According to the information and explanations given to us and based on ourexamination of the books of account of the Company the Company has not entered intonon-cash transactions with directors or persons connected with him. Therefore theprovisions of Clause (xv) of paragraph 3 of the Order are not applicable to the Company.
xvi. In our opinion and according to the information and explanation given to us theCompany is not required to be registered under section 45-IA ofthe Reserve Bank of IndiaAct 1934.
Annexure - B to the Independent Auditor's Report
Report on the Internal Financial Controls under Clause (i) of Sub-section 3 of Section143 of the Companies Act 2013 ("the Act")
We have audited the internal financial controls over financial reporting of KamanwalaHousing Construction Limited ("the Company") as of 31st March 2021inconjunction with our audit of the standalone financial statements of the Company for theyear 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 Act.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls over Financial Reporting(the "Guidance Note") and the Standards on Auditing issued by ICAI andspecified under section 143(10) of the Companies Act 2013 to the extent applicable to anaudit of internal financial controls both applicable to an audit of Internal FinancialControls and both issued by the Institute of Chartered Accountants of India. ThoseStandards and the Guidance Note require that we comply with ethical requirements by ICAIand plan and perform the audit to obtain reasonable assurance about whether adequateinternal financial controls over financial reporting was established and maintained and ifsuch controls operated effectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system over financial reporting and their operatingeffectiveness. Our audit of internal financial controls over financial reporting includedobtaining an understanding of internal financial controls over financial reportingassessing the risk that a material weakness exists and testing and evaluating the designand operating effectiveness of internal control based on the assessed risk. The proceduresselected depend on the auditor's judgment including the assessment of the risks ofmaterial 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 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 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.
In our opinion and according to the information and explanations given to us theCompany has in all material respects an adequate internal financial controls system overfinancial reporting and such internal financial controls over financial reporting wereoperating effectively as at March 31 2021 based on the internal control over financialreporting criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls OverFinancial Reporting issued by the Institute of Chartered Accountants of India.
|For Majithia & Associates Chartered Accountants |
|Firm Reg. No. 105871W |
|Bhavesh R. Majithia Partner |
|Membership No. 048194 |
|Place : Mumbai |
|Date : 30th June 2021 |