The Members of Kridhan Infra Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying standalone financial statements of Kridhan InfraLimited ("the Company") which comprise the balance sheet as at 31st March 2019the statement of profit and loss statement of changes in equity and statement of cashflows for the year then ended and notes to the financial statements including a summaryof 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 standalone financial statements give the information requiredby the Act in the manner so required and give a true and fair view in conformity with theaccounting principles generally accepted in India of the state of affairs of the Companyas at March 31 2019 its loss changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
We conducted our audit in accordance with the Standards on Auditing (SA's) issued byICAI and specified under section 143 (10) of the Companies Act 2013. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the 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 together with the ethical requirements that are relevant to our audit of thefinancial statements under the provisions of the Companies Act 2013 and the Rulesthereunder and we have fulfilled our other ethical responsibilities in accordance withthese requirements and the Code of Ethics. We believe that the audit evidence we haveobtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
a) We draw attention to Note No. 30 & 40 of the standalone financial statementswherein the company has stated that it has provided for impairment loss of Rs 11175.82Lakhs in respect of its investments in its subsidiaries as well as towards its receivablesamounting to Rs 1487.33 Lakhs;
b) We draw attention to Note No. 30 & 40 of the standalone financial statementswherein the company has stated that it has provided for an amount of Rs 2555.66 Lakhs inrespect of claims made on invocation of guarantees given to bankers for borrowings made byits subsidiary consequent upon defaults / non-compliance of loan covenant(s).
Key Audit Matters
Key audit matters are those matters that in our professional judgment were of mostsignificance in our audit of the standalone Ind AS financial statements for the financialyear ended March 31 2019. These matters were addressed in the context of our audit of thestandalone Ind AS financial statements as a whole and in forming our opinion thereon andwe do not provide a separate opinion on these matters. For each matter below ourdescription of how our audit addressed the matter is provided in that context.
We have determined the matters described below to be the key audit matters to becommunicated in our report. We have fulfilled the responsibilities described in theAuditor's responsibilities for the audit of the standalone Ind AS financial statementssection of our report including in relation to these matters. Accordingly our auditincluded the performance of procedures designed to respond to our assessment of the risksof material misstatement of the standalone Ind AS financial statements. The results of ouraudit procedures including the procedures performed to address the matters below providethe basis for our audit opinion on the accompanying standalone Ind AS financialstatements.
Key Audit Matters and How our audit addressed the matter
Impairment of investments in subsidiary companies
The company has made investments in equity and other instruments issued by itssubsidiary company which carry on business in different geographical areas and are thusexposed to risks that are significantly different from those to which the company isexposed. In terms of the requirement of Ind AS 36 - Impairment of Assets the company isrequired to evaluate the impairment loss if any on these investments which is done bycarrying out an impairment testing of these investments. Such impairment testing is doneby comparing the cost of such investments vis-a-vis the value in use that these investeesubsidiary companies generate / potentially generate over the future envisaged life span.The determination of the recoverable amount from the subsidiary is a technical matter andinvolves significant judgements w.r.t. the amount that may be recovered and hence theevaluation of impairment of investments in subsidiary companies has been considered as akey audit matter.
Our audit procedures includes the following:
a) Reviewed the past earnings and the anticipated earnings of the future and the likelycosts to work out the likely net earnings available to the company
b) Reviewed the risks and contingency to which these subsidiaries are exposed to in theprevalent scenario
c) Discussed / evaluated the potential changes w.r.t. the cash flows anticipated in thefuture years.
d) Discussed the realisable value of the net assets of the subsidiaries to evaluate theimpairment from a distress sale point of view.
Litigation and Claims
Litigation and claims are pending with multiple tax and regulatory authorities andthere are claims from vendors/suppliers and employees which have not been acknowledged asdebt by the company.
In the normal course of business financial exposures may arise from pendinglegal/regulatory proceedings and from above referred claims not acknowledged as debt bythe company. Whether a claim needs to be recognized as liability disclosed as contingentliability or considered as remote in the standalone financial statements is dependent on anumber of significant assumptions and judgments. The amounts involved are potentiallysignificant and determining the amount if any to be recognized or disclosed in thefinancial statements is inherently subjective.
We have considered Litigations and claims as Key Audit Matter as it requiressignificant management judgment including accounting estimates that involves highestimation uncertainty.
Our audit procedures included the following:
Understood Management's process and control for determining tax litigations and otherlitigations and claims and its appropriate accounting and disclosure.
Tested key controls surrounding such litigations. Discussed pending matters with theCompany's legal department. Assessed management's conclusions through understandingprecedents set in similar cases.
We have assessed the appropriateness of presentation of the most significant contingentliabilities in the standalone financial statements.
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 Annual Report but does not includethe financial statements and our auditor's 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 financial statements our responsibility is to readthe other information and in doing so consider whether the other information ismaterially inconsistent with the standalone financial statements or our knowledge obtainedin the audit or otherwise appears to be materially misstated.
If based on the work we have performed we conclude that there is a materialmisstatement of this other information we are required to report that fact. We havenothing to report in this regard.
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 financialposition financial performance changes in equity and cash flows of the Company inaccordance with the accounting principles generally accepted in India including theaccounting Standards specified under section 133 of the Act. This responsibility alsoincludes maintenance of adequate accounting records in accordance with the provisions ofthe 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 statement that givea true and fair view and are free from material misstatement whether due to fraud orerror.
In preparing the financial statements management is responsible for assessing theCompany's ability to continue as a going concern disclosing as applicable mattersrelated to going concern and using the going concern basis of accounting unless managementeither intends to liquidate the Company or to cease operations or has no realisticalternative 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 Financial Statements
Our objectives are to obtain reasonable assurance about whether the 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 financial statements.
As part of an audit in accordance with SA's we exercise professional judgment andmaintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the 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 Companies Act 2013 we are also responsible for expressing our opinion onwhether the company has adequate internal financial controls system in place and theoperating effectiveness of such 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 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 financial statements or if such disclosures are inadequate to modify our opinion.Our conclusions are based on the audit evidence obtained up to the date of our auditor'sreport. However future events or conditions may cause the Company to cease to continue asa going concern.
Evaluate the overall presentation structure and content of the financialstatements including the disclosures and whether the financial statements represent theunderlying transactions and events in a manner that achieves fair presentation.
Materiality is the magnitude of the misstatements in the standalone financialstatements that individually or in aggregate makes it probable that the economicdecisions of a reasonably knowledgeable user of the financial statements may beinfluenced. We consider quantitative materiality and qualitative factors in (i) planningthe scope of our audit work and in evaluating the results of our work; and (ii) toevaluate 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 financial statements of thecurrent period and are therefore the key audit matters. We describe these matters in ourauditor's report unless law or regulation precludes public disclosure about the matter orwhen 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
As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of sub-section (11) of section 143 ofthe Companies Act 2013 we give in Annexure - I a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
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 and the Cash Flow Statementdealt with by this Report are in agreement with the books of account.
(d) In our opinion the aforesaid standalone financial statements comply in materialrespect with the Indian Accounting Standards specified under Section 133 of the Act readwith Rule 7 of the Companies (Accounts) Rules 2014.
(e) On the basis of the written representations received from the directors as on 31stMarch 2019 taken on record by the Board of Directors none of the directors isdisqualified as on 31st March 2019 from being appointed as a director in terms of Section164 (2) of the Act.
(f) With respect to the adequacy of the internal financial controls over financialreporting of the Company and the operating effectiveness of such controls refer to ourseparate Report in Annexure II.
(g) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us:
i) The Company does not have any pending litigations which would have a material impacton its financial position other those disclosed at Note No. 42;
ii) Based on the assessment made by the company there are no material foreseeablelosses on its long term contracts that may require any provisioning;
iii) In view of there being no amounts required to be transferred to the InvestorEducation and Protection Fund for the year under audit the reporting under this clause isnot applicable.
For MKPS & Associates
M No. 065025
UDIN : 19065025AAAAFZ6461
Mumbai August 14 2019
Annexure - I to the Independent Auditors Report
Referred to in our report of even date to the members of Kridhan Infra Limited for theyear ended March 31 2019
i) (a) The company is maintaining proper records showing full particulars includingquantitative details and situation of its fixed assets.
(b) The fixed assets of the company have been physically verified by the management ina phased manner and no unadjusted are pending as at the reporting date materialdiscrepancies. In our opinion the frequency of verification is reasonable.
(c) The title of the immovable assets of the company are in its name.
ii) (a) In our opinion and according to the information and explanations provided tous we are of the view that the company has a system of physical verification of itsinventory the frequency of which is reasonable.
(b) In our opinion and according to the information and explanations provided to us nomaterial discrepancies were noticed on physical verification of the same.
iii) The company has granted unsecured loans to companies covered in the registermaintained under section 189 of the Companies Act 2013 and with respect to the same:
a) In our opinion the terms and conditions of grant of such loans are not prima facieprejudicial to the Company's interest
b) The schedule of repayment of principal and payment of interest has been generallystipulated and the repayment/receipts of the principal amount and the interest are notregular in respect of which provision for impairment has been made.
c) There is overdue amount in respect of loans granted to such companies which havebeen duly provided for.
iv) In our opinion and according to the information and explanations given to us inrespect of loans investments and guarantees the company has complied with the provisionsof Section 185 and 186 of the Act.
v) In our opinion and according to the information and explanations given to us thecompany has not accepted any deposits during the period under audit. Consequently thedirectives issued by Reserve Bank of India and the provisions of sections 73 to 76 of theAct and the rules framed thereunder are not applicable.
vi) As per the information and explanations provided to us we are of the opinion thatthe maintenance of cost records has been not been specified by the Central Governmentunder sub-section (1) of section 148 of the Act for the company.
vii) (a) According to the information and explanations given to us and based on therecords of the company examined by us the company is generally regular in depositing theundisputed statutory dues including provident fund employees' state insurance income-tax sales-tax service tax duty of customs duty of excise value added tax cess andany other material statutory dues as applicable with the appropriate authorities inIndia.
According to the information and explanations given to us there are no undisputedamounts in respect of the aforesaid statutory dues which are in arrears as at March 312019 for a period of more than six months from the date they became payable.
(b) According to the information and explanations given to us there are certain casesof applicable statutory dues which have not been deposited on account of any disputewhich are detailed hereunder:
|Name of Statute and Nature of Dues ||Forum where dispute is pending ||FY to which the amount relates ||Amount involved Rs in Lakhs) |
|Income Tax under Income Tax Act 1961 ||Commissioner of Income Tax (Appeals) has passed an order for which rectification application has been filed to give effect to the order. ||2012-13 ||17.68 |
viii) Based upon the audit procedures carried out by us and on the basis of informationand explanations provided by the management we are of the opinion that the company has notdefaulted in repayment of dues to banks / Financial Institutions. The company does nothave any borrowings from government and the company has not issued any debentures as atthe balance sheet date.
ix) In our opinion and according to the information and explanations given to us theterm loans taken by the company have been ultimately utilised for the purpose for whichthey were taken. Further the company has not raised any funds by way of initial / furtherpublic offer.
x) Based on the audit procedures performed by us for the purpose of reporting the trueand fair view of the financial statements and as per the information and explanationsgiven to us by the management we report that we have neither come across any instance offraud by the company or on the company by its officers or employees noticed or reportedduring the year nor have we been informed of any such case by the management.
xi) According to the information and explanations given to us and based on ourexamination of records of the company the company has paid/ provided for managerialremuneration in accordance with the requisite approvals mandated by the provisions ofsection 197 read with schedule V of the Act.
xii) The company is not a Nidhi Company and hence the reporting requirements underclause (xii) of paragraph 3 of the order are not applicable.
xiii) According to the information and explanations given to us all transactionsentered into by the company with related parties are in compliance with section 177 and178 of the Act where applicable and the details thereof have been disclosed in thefinancial statements as required by the applicable accounting standards.
xiv) The company has not made any preferential allotment of shares during the yearunder audit.
xv) As per the information and explanations given to us the company has not enteredinto any non-cash transactions with directors or persons connected with them.
xvi) In our opinion and according to the information and explanations given to us thecompany is not required to be registered under Section 45 - IA of the Reserve Bank ofIndia 1934.
For MKPS & Associates
M No. 065025
UDIN : 19065025AAAAFZ6461
Mumbai August 14 2019
Annexure - II to the Independent Auditors Report
Referred to in our report of even date to the members of Kridhan Infra Limited for theyear ended March 31 2019
Report on the Interna! 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 KridhanInfra Limited ("the Company") as of March 31 2019 in conjunction with our auditof the 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 efficient conduct of itsbusiness including adherence to company's policies the safeguarding of its assets theprevention and detection of frauds and errors the accuracy and completeness of theaccounting records and the timely preparation of reliable financial information asrequired under the Companies Act 2013.
Our responsibility is to express an opinion on the Company's internal financialcontrols over financial reporting based on our audit. 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 and deemedto be prescribed under section 143(10) of the Companies Act 2013 to the extentapplicable to an audit of internal financial controls both applicable to an audit ofInternal Financial Controls and both issued by the Institute of Chartered Accountants ofIndia. Those Standards and the Guidance Note require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whetheradequate internal financial controls over financial reporting was established andmaintained and if such 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 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 ofrecords that in reasonable detail accurately and fairly reflect the transactions anddispositions of the assets of the company; (2) provide reasonable assurance thattransactions are recorded as necessary to permit preparation of financial statements inaccordance with generally accepted accounting principles and that receipts andexpenditures of the company are being made only in accordance with authorisations ofmanagement and directors of the company; and (3) provide reasonable assurance regardingprevention or timely detection of unauthorised acquisition use or disposition of thecompany's assets that could have a material 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 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 2019 based on theinternal control 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 MKPS & Associates
Chartered Accountants FRN 302014E
Partner M No. 065025
UDIN : 19065025AAAAFZ6461
Mumbai August 14 2019