To the Members of
M/s. KMF Builders and Developers Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of M/s. KMF Buildersand Developers Limited. which comprise the Balance Sheet as at March 31 2021 and theStatement of Profit and Loss statement of changes in Equity statement of Cash Flow forthe year then ended and Notes to financial statements including a summary of significantaccounting policies and other explanatory information (hereinafter referred to as"the standalone financial statements"].
In our opinion and to the best of our information and according to the explanationsgiven to us the aforesaid standalone financial statements give the information requiredby the Companies Act2013 ("the Act"] in the manner so required and give a trueand fair view in conformity with the Accounting Standards prescribed under section 133 ofthe Act and other accounting principles generally accepted in India of the state ofaffairs of the Company as at 31 March 2021 and its profit changes in equity its cashflows for the year ended on that date.
Basis for Opinion
We conducted our auditing accordance with the Standards on Auditing (SAs) specifiedunder section 143(10] of the Companies Act 2013. Our responsibilities under thoseStandards are further described in the Auditor's Responsibility for the Audit of theStandalone Financial Statements section of our report. We are independent of the Companyin accordance with the Code of Ethics issued by the Institute of Chartered Accountants ofIndia (ICAI) together with the ethical requirements that are relevant to our audit of thestandalone financial statements under the provisions of the Companies Act 2013 and theRules made there under and we have fulfilled our other ethical responsibilities inaccordance with these requirements and the ICAI's Code of Ethics. We believe that theaudit evidence we have obtained is sufficient and appropriate to provide a basis for ouraudit opinion on the standalone financial statements.
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone financial statements of the current period.These matters were addressed in the context of our audit of the standalone financialstatements as a whole and in forming our opinion thereon and we do not provide aseparate opinion on these matters.
We have described below to be the Key audit matters to be communicated in our report.
|s. Key Audit Matter No. ||Auditors Response |
|1. Revenue Recognition of Construction Contracts ||Principal Audit Response |
|The Company follows/recognises revenue based on IND AS - 115. ||Our Audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows. |
| ||- Evaluated the design of the internal controls relating to implementation of the new revenue accounting standard. |
| ||- Obtained listing of all the contracts as on |
| ||31.03.2021. Identified the contracts that are not completed contracts for which handover of units not done and Partial occupancy certificate received as on 28.03.2018. |
|2. Carrying Values of Inventories (Construction work in progress and Stock in trade) ||Principal Audit procedures |
|There is a Risk that the valuation of inventory may be misstated as it involves the determination at cost and estimated total construction cost of completion of the projects which is an area of Judgement. ||We assessed the Company's Process for the valuation of inventories. |
|Refer Notes to the Standalone Financial statements. ||Our audit approach consisted testing of the design and operating effectiveness of the internal controls and substantive testing as follows: |
| ||? Evaluated the design of the internal controls relating to the valuation of inventories. |
| ||? Tested the operating effectiveness of controls for the review of estimates involved for the expected cost of completion of projects including construction cost incurred construction budgets and net realizable value. We carried out a combination of procedures involving enquiry and observation and inspection of evidence in respect of operation of these- controls. Selected a sample of project specific inventories and performed the procedures around: |
| ||? Construction costs incurred for the project specific inventories by tracing to the supporting documents estimated total construction cost to be incurred for completing the construction of the project and corroborated the same with the reports from external supervising engineers where applicable. Obtained the company's assessment of NRV for the project specific inventories. |
| ||? 9The expected net amounts to be realized from the sale of inventory in the-ordinary course of business. |
|3. Investment in Shares ||The Investment in Shares reflecting in the Company Balance sheet is held in the name of the Director 'Kavita Chadha' as on 31.03.2021 vide Board Resolution dated 29.05.2019 to hold in the name of the Director. |
|Refer Notes to Accounts 1(j) to the standalone financial statement || |
Information Other than the Financial Statements and Auditor's Report Thereon
The Company's Board of Directors is responsible for the other information. Theother information comprises the information included in the Board's Report ManagementDiscussion and Analysis Report and Business Responsibility Report but does not includethe standalone financial statements and our auditor's report thereon.
Our opinion on the standalone financial statements does not cover the otherinformation and we do not express any form of assurance conclusion thereon.
In connection with our audit of the standalone financial statements ourresponsibility is to read the other information and in doing so consider whether theother information is materially inconsistent with the standalone financial statements orour knowledge obtained during the course of our audit or otherwise appears to bematerially misstated any form of assurance conclusion thereon.
If based on the work we have performed we conclude that there is no materialmisstatement of this other information; we are required to report that fact. We havenothing to regard in this regard.
Management's Responsibility for the Standalone Financial Statements
The Company's Board of Directors are responsible for the matters stated in Section134(5) of the Companies Act 2013 ("the Act") with respect to the preparation ofthese standalone financial statements that give a true and fair view of the financialposition financial performance and cash flows and changes in equity of the Company inaccordance with the accounting principles generally accepted in India including theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014.
This responsibility also includes maintenance of adequate accounting records inaccordance with the provisions of the Act for safeguarding the assets of the Company andfor preventing and detecting frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of adequate internal financialcontrols that were operating effectively for ensuring the accuracy and completeness ofthe accounting records relevant to the preparation and presentation of the financialstatements that give a true and fair view and are free from material misstatement whetherdue to fraud or error.
In preparing the standalone financial statements management is responsible forassessing the Company's ability to continue as a going concern disclosing as applicablematters related to going concern and using the going concern basis of accounting unlessmanagement either intends to liquidate the Company or to cease operations or has norealistic alternative but to do so.
Those Board of Directors are also responsible for overseeing the Company's financialreporting process. Auditor's Responsibility for the Audit of the Standalone FinancialStatements
Our objectives are to obtain reasonable assurance about whether the standalonefinancial statements as a whole are free from material misstatement whether due to fraudor error and to issue an auditor's report that includes our opinion. Reasonable assuranceis a high level of assurance but is not a guarantee that an audit conducted in accordancewith SAs will always detect a material misstatement when it exists. Misstatements canarise from fraud or error and are considered material if individually or in theaggregate they could reasonably be expected to influence the economic decisions of userstaken on the basis of these stand alone financial statements.
As part of an audit in accordance with SAs we exercise professional judgment andmaintain professional scepticism 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 misstatement resulting from fraud is higher than for one resulting from erroras fraud may involve collusion forgery intentional omissions misrepresentations or theoverride of internal control.
Obtain an understanding of internal financial control relevant to the audit inorder to design audit procedures that are appropriate in the circumstances. Undersection143(3](i] of the Act we are also responsible for expressing our opinion on whetherthe Company has adequate internal financial controls system in place and the operatingeffectiveness of such controls.
Evaluate the appropriateness of accounting policies used and the reasonablenessof accounting estimates and related disclosures made by 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 uncertainty
exists related to events or conditions that may cast significant doubt on the Company'sability to continue as a going concern. If we conclude that a material uncertainty existswe are required to draw attention in our auditor's report to the related disclosures inthe standalone financial statements or if such disclosures are inadequate to modify ouropinion. Our conclusions are based on the audit evidence obtained up to the date of ourauditor's report. However future events or conditions may cause the Company to cease tocontinue as a going concern.
Evaluate the overall presentation structure and content of the standalonefinancial statements including the disclosures and whether the standalone financialstatements represent the underlying transactions and events in a manner that achieves fairpresentation.
Materiality is the magnitude of misstatements in the stand alone 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 our audit work and in evaluating the results of our work; and
(ii) to evaluate the effect of any identified misstatements in the standalone financialstatements.
We communicate with those charged with governance regarding among other matters theplanned scope and timing of the audit and significant audit findings including anysignificant deficiencies in internal control that we identify during our audit.
We also provide those charged with governance with a statement that we have compliedwith relevant ethical requirements regarding independence and to communicate with themall relationships and other matters that may reasonably be thought to bear on ourindependence and where applicable related safeguards.
From the matters communicated with those charged with governance we determine thosematters that were of most significance in the audit of the standalone financial statementsof the current period and are therefore the key audit matters. We describe these mattersin our auditor's report unless law or regulation precludes public disclosure about thematter or when in extremely rare circumstances we determine that a matter should not becommunicated in our report because the adverse consequences of doing so would reasonablybe expected to outweigh the public interest benefits of such communication.
Report on Other Legal and Regulatory Requirements
1. As required by 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 and the Statement of Profit and Loss the statement of cash flowand statement of changes in equity dealt with by this Report are in agreement with thebooks of account;
(d) In our opinion the aforesaid standalone financial statements comply with theAccounting Standards specified under Section 133 of the Act read with Rule 7 of theCompanies (Accounts) Rules 2014;
(e) On the basis of the written representations received from the directors as on 31March 2021 taken on record by the Board of Directors none of the directors isdisqualified as on 31 March 2021 from being appointed as a director in terms of Section164 (2) of the Act; and
(f) With respect to the adequacy of the "internal financial controls overfinancial reporting of the company with reference to financial statements" reportingof the Company and the operating effectiveness of such controls refer to our separateReport in "Annexure-A". Our report expresses an unmodified opinion of theadequacy and Operating effectiveness of the company's Internal financial controls overfinancial reporting.
(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 opinionand to 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 provisions 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 opinion and to the best ofour information and according to the explanations given to us:
i. The Company has disclosed the impact of pending litigations on its financialposition in its financial statements.
ii. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any.
iii. The Company did not have any long-term contracts including derivative contractsfor which there were any material foreseeable losses;
iv. There has been no amount in transferring amount required to be transferred to theInvestor Education and Protection fund by the Company.
2. As required by the Companies (Auditor's Report) Order 2016 ("the Order")as amended issued by the Central Government of India in terms of sub-section (11) ofsection 143 of the Act we give in the "Annexure B" a statement on the mattersspecified in paragraphs 3 and 4 of the Order.
Annexure "A" to the Independent Auditor's Report.
(Referred to in paragraph 1(f) under 'Report on Other Legal and RegulatoryRequirements' section of our report to the members of KMF Builders and Developers Limitedof even date)
Report on the Internal Financial Controls Over Financial Reporting under Clause (i) ofSub-section 3 of Section 143 of the Companies Act 2013 (the "Act")
We have audited the internal financial controls over financial reporting of M/s.KMFBuilders and Developers Limited (the "Company"] as of March 31 2021inconjunction with our audit of the standalone Ind AS financial statements of the Companyfor the year ended on that date.
Management's Responsibility for Internal Financial Controls
he 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. These responsibilities includethe design implementation and maintenance of adequate internal financial controls thatwere operating effectively for ensuring the orderly and efficient conduct of its businessincluding adherence to company's policies the safeguarding of its assets the preventionand detection of frauds and errors the accuracy and completeness of the accountingrecords and the timely preparation of reliable financial information as required underthe Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. We conducted our audit in accordancewith the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting(the"Guidance Note"] issued by the Institute of Chartered Accountants of Indiaand the Standards on Auditing prescribed under Section 143(10] of the Companies Act 2013to the extent applicable to an audit of internal financial controls. Those Standards andthe Guidance Note require that we comply with ethical requirements and plan and performthe audit to obtain reasonable assurance about whether adequate internal financialcontrols over financial reporting 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 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 auditors' judgement 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 payments 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.
According to the information and explanations given to us the company has notintroduced Internal Audit system for the year.
In our opinion to the best of our information and according to the explanations givento us except for the effect of the matter described in the above paragraph the Companyhas 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.
ANNEXURE "B" TO THE INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 2 under 'Report on Other Legal and Regulatory Requirements'section of our report to the Members of KMF Builders and Developers Limited of even date)
i) In respect of Company's Fixed Assets:
a) The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets(Property Plant and Equipment).
b) The fixed assets (Property Plant and Equipment) were physically verified during theyear by the Management in accordance with a regular programmed of verification which inour opinion provides for physical verification of all the fixed assets (Property Plantand Equipment) at reasonable intervals. According to the information and explanation givento us no material discrepancies were noticed on such verification.
c) With Respect to Immovable properties of Land that are freehold according to theinformation and explanations given to us the records examined by us and based on theexamination of the conveyance deed/Registered sale deed provided to us we report that thetitle deeds compromising all the immovable properties of land & buildings which arefree hold are held in the name of Company as at the balance sheet date. According to theinformation and explanation given to us the company does not have any leasehold land andleased/freehold
Building other than administrative block and Project facilities temporary constructedat the project sites and capitalized as Building.
ii) In our opinion and according to the information and Explanations given to ushaving regard to the nature of Inventory the physical verification by way of verificationof title deeds site visits by the management and certification of extent of workcompletion by competent persons are at reasonable intervals and no material discrepancieswere noticed on physical verification.
iii) According to the information and explanations given to us the Company has notgranted any loans secured or unsecured to companies firms Limited Liabilitypartnerships or other parties covered in the Register maintained under section 189 of theAct. Accordingly the provisions of clause 3 (iii) (a) to (C) of the Order are notapplicable to the Company and hence not commented upon.
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 Companies Act 2013in respect of loans investments guarantees and securities.
v) According to the information and explanations given to us the Company has notaccepted any deposits from the public during the year and hence the directives issued bythe Reserve Bank of India and the provisions of Sections 73 to 76 or any other relevantprovisions of the Act and the Companies (Acceptance of Deposit) Rules 2015 with regard tothe deposits accepted from the public are not applicable.
vi) The maintenance of the cost records has not been specified by the CentralGovernment under Section 148(1) of the Companies Act2013 for the business activatescarried out by the company. Thus reporting under Clause 3(vi) of the order is notapplicable to the Company.
vii) According to the information and explanations given to us in respect of statutorydues;
a) The Company has been generally regular in depositing undisputed statutory duesincluding Provident Fund Employees State Insurance Income-Tax Sales tax Service TaxDuty of Customs Duty of Excise Goods & Service tax Cess and any other statutorydues with the appropriate authorities. The provisions of Employees state insurance andExcise duty are not applicable to the operations of the company.
b) There were no undisputed amounts payable in respect of provident fund Employee'sState Insurance Income tax sales tax Goods & Service tax duty of customs servicetax cess and other material statutory dues were in arrears as at 31 March 2021 for aperiod of more than six months from the date they became payable.
c) There are no dues of Income- Tax Sales Tax Service Tax Customs Duty Excise DutyValue Added Tax and Goods & Service Tax which have not been deposited as on 31stMarch2021 on account of disputes except as given below:
iv) In Our opinion and according to the information and explanations given to us theCompany has not defaulted any loans or borrowings to any financial institutions banksGovernment or debenture holders during the year. The Company has not taken any loans orborrowings from financial institutions and government.
v) The company has not raised moneys by way of initial public offer or further publicoffer including debt instruments and term Loans. Accordingly the provisions of clause 3(ix) of the Order
are not applicable to the Company.
vi) To the best of our knowledge and according to the Information and explanationsgiven to us no fraud by the company or no material fraud on the company by its officersor employees has been noticed or reported during the year.
vii) 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 CompaniesAct;
viii) The Company is not a Nidhi Company. Therefore the provisions of clause 3 (xii)of the Order are not applicable to the Company.
ix) In our opinion and according to the information and explanations given to us thecompany is in compliance with section 177 and 188 of Companies Act 2013 where applicablefor all transactions with the related parties and the details of related partytransactions have been disclosed in the standalone Financial Statements as required by theapplicable accounting standards.
x) 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.
xi) In our opinion and according to the information and explanations given to usduring the year the company has not entered into any non-cash transactions with directorsor persons connected with him. Accordingly the provisions of clause 3 (xv) of the Orderand section 192 of the companies Act2013 are not applicable to the Company.
xii) In our opinion the company is not required to be registered under section 45 IAof the Reserve Bank of India Act 1934 and accordingly the provisions of clause 3 (xvi)of the Order are not applicable to the Company.
For C S Nagendra &Co.
Firm Reg No.9486S
CA C S Nagendra
ICAI Reg. No. 27390
PLACE : Bangalore