To the Members of MADHAV INFRA PROJECTS LIMITED
Report on the Audit of the Financial Statements
We have audited the standalone financial statements of MADHAV INFRA PROJECTSLIMITED ("the Company") which comprise the standalone Balance Sheet as atMarch 31 2019 and the standalone Statement of Profit and Loss (including othercomprehensive income) standalone statement of changes in equity and the standalonestatement of cash flows for the year ended and notes to the standalone financialstatements including a summary of significant accounting policies and other explanatoryinformation (hereinafter referred to as "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 Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the accounting principles generally accepted in Indiaincluding Indian Accounting Standards ("Ind AS") prescribed under section 133 ofthe Act read with the Companies (Indian Accounting Standards) Rules as amended:
a) In the case of the Balance Sheet of the state of affairs of the Company as at March312019;
b) In the case of the Statement of Profit and Loss of the Profit for the year ended onthat date; and
c) In the case of the Cash Flow Statement of the Cash Flows for the year ended on thatdate.
2. Basis for Qualified Opinion
I. Consequent to action under section 132 of the Income Tax Act in Madhav Group ofCompany during Nov. 2016 searches/surveys was carried out at various places. The searchesresulted in seizure /impounding of documents.
Based on survey department issued notices for filling returns from the year 2010-2011to 2015-16 accordingly returns for the above year were filed. Subsequently the Companyhas filled application to Hon'ble Income Tax Settlement Commission disclosing additional /unaccounted income of Rs. 25.85 crores for the above years on which tax and interestliability is Rs. 5.64 crores ( after some adjustments ). The Hon'ble Income Tax SettlementCommission has admitted the application u/s 245D (1) of the Income Tax Act. The case ispending before Hon'ble Income Tax Settlement Commission. (refer Note No. 48)
Effect of the said disclosure and tax liability is not given in the books of accounts.
II. Non-ascertainment and Non-Provision of Deferred Tax Liability as required under IndAS -12 Income Tax' (refer Note No. 43).
III. None disclosure of the required information as required under Ind AS 11(Construction Contracts ) regarding Construction Contracts.
We conducted our audit in accordance with the Standards on Auditing (SAs) specifiedunder section 143(10) of the Act. Our responsibilities under those Standards are furtherdescribed in the Auditor's Responsibilities for the Audit of the Financial Statementssection of our report. We are independent of the Company in accordance with the Code ofEthics issued by the Institute of Chartered Accountants of India together with the ethicalrequirements that are relevant to our audit of the financial statements under theprovisions of the Act 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.
3. Key Audit Matters
Key audit matters are those matters that in our professional judgement were of mostsignificance in our audit of the standalone financial statements of the current period. Wehave determined that there are no key audit matters to be communicated in our report.
4. Management's Responsibility for the Financial 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 financial statements that givea true and fair view of the financial position financial performance and cash flows ofthe Company in accordance with the accounting principles generally accepted in Indiaincluding the Accounting Standards specified under Section 133 of the Act. Thisresponsibility also includes the maintenance of adequate accounting records in accordancewith the provision of the Act for safeguarding of the assets of the Company and forpreventing and detecting the frauds and other irregularities; selection and application ofappropriate accounting policies; making judgments and estimates that are reasonable andprudent; and design implementation and maintenance of internal financial control thatwere operating 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 financial statements the 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.
5. Auditor's Responsibility 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 SAs 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 Act if applicable 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 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.
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.
6. Report on other Legal and Regulatory Requirements
I. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government in terms of sub-section (11) of section 143 of the Actand on the basis of such checks of the books and records of the Company as we consideredappropriate and according to the information and explanations given to us we give in theAnnexure "A" a statement on the matters specified in the paragraph 3 and 4 ofthe said Order to the extent applicable.
II. 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 except for the effects ofthe matters described in the Basis for Qualified Opinion section of our report have beenkept by the Company so far as it appears from our examination of those books.
c) The Balance Sheet the Statement of Profit and Loss and Cash Flow Statement dealtwith by this Report are in agreement with the books of account.
d) The standalone Balance sheet the Standalone Statement of Profit and Loss includingOther Comprehensive Income the Standalone Statement of Changes in Equity and theStandalone Statement of Cash Flow dealt with by this report are in agreement with therelevant books of account.
e) 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.
f) On the basis of written representations received from the directors as on 31 March2019 taken on record by the Board of Directors none of the directors is disqualified ason 31 March 2019 from being appointed as a director in terms of Section 164(2) of theAct.
g) 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' and
h) 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 usremunerations paid by the Company to its directors during the year is in accordance withthe provisions of section 197 of the Act.
i) In our opinion and to the best of our information and according to the explanationsgiven to us we report as under with respect to the other matters included in theAuditor's Report in accordance with the Rule 11 of the Companies (Audit and Auditors)Rules 2014:
I. The Company does not have any pending litigations which would impact its financialposition.
II. The Company did not have any long-term contracts including derivative contracts assuch the question of commenting on any material foreseeable losses thereon does not arise.
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 INDEPENDENT AUDITORS' REPORT
(Referred to in paragraph 6 under the heading of "Report on other legal andregulatory requirements" of our report of even date)
1. a) The Company has maintained proper records showing full particulars includingquantitative details and situation of its fixed assets.
b) Major portion of fixed assets has been physically verified during the year by themanagement in accordance with a program of verification which in our opinion providesfor physical verification of all the fixed assets at reasonable interval. No materialdiscrepancies were noticed on such physical verification.
c) According to the information and explanations given to us and on the basis of ourexamination of the records of the Company the title deeds of immovable properties areheld in the name of the Company.
2. As explained to us the inventories were physically verified by the management atreasonable intervals during the year and no material discrepancies were noticed on suchverification.
3. The Company has granted interest free Unsecured Loan to the Companies covered in theregister maintained under section 189 of the Companies Act. 2013.
a) The terms and conditions of grant of such loan are not prejudicial to the company'sinterest except non charging of interest on the loan granted.
b) There is no stipulation for the repayment of principal amount and interest is notcharged on the loan. The principal amount outstanding is Rs.12269079 as on 31/03/19.
4. 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 with respectto the loans and investments made and guarantees given except interest free loan to itsCompanies in which Director (s) of the Company is interested.
5. The Company has not accepted any deposits within the meaning of Sections 73 to 76 ofthe Act and the Companies (Acceptance of Deposits) Rules 2014 (as amended). Accordinglythe provisions of clause 3(v) of the Order are not applicable to the Company.
6. The Central Government has not prescribed the maintenance of cost records underSection 148(1) of the Act for any of the product manufactured by the Company.
7. a) According to the information and explanation given to us and on the basis of ourexamination of the records of the Company amount deducted / accrued in the books ofaccount in respect of un-disputed statutory dues including provident fund employees'state insurance income-tax service tax duty of custom duty of excise value added taxcess and other material statutory dues have been generally regularly deposited during theyear by the Company with the appropriate authorities. According to the information andexplanations given to us no undisputed amounts payable in respect of such statutory dueswere in arrears as at 31st March 2019 for the period of more than six months from the datethey became payable.
b) According to information and explanation given to us there are no disputed incometax sales tax excise duty service tax and Goods and Service Tax which have not beendeposited on any account of dispute.
8. The Company has not defaulted in repayment of any loans or borrowings from anyfinancial institution banks government or debenture holders during the year.Accordingly provision of Clause 3(viii) of the Companies (Auditor's Report) order 2016is not applicable to the Company.
9. The Company has not raised money by way of further public offer (including debtinstruments) and money raised by way of term loan were applied for the purposes for whichthey were raised.
10. According to the information and explanation given to us no material fraud by theCompany or on the Company by its officers or employees has been noticed or reported duringthe course of our audit.
11. According to the information and explanation given to us and based on ourexamination of the records of the Company remuneration has been paid to the Managerialpersons in accordance with the requisite approvals mandated by the provisions of section197 read with Schedule V to the Companies Act 2013.
12. In our opinion and according to the information and explanations given to us theCompany is not a Nidhi Company. Accordingly provision of Clause 3(xii) of the Companies(Auditor's Report) order 2016 is not applicable to the Company.
13. According to the information and explanation given to us and based on ourexamination of the records of the Company transaction with the related parties are incompliance with sections 177 and 188 of the Act where applicable and details of suchtransactions have been disclosed in the financial statements as required by the applicableaccounting standards.
14. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not made preferential allotmentduring the year.
15. According to the information and explanation given to us and based on ourexamination of the records of the Company the Company has not entered in to non-cashtransactions with directors or persons connected with him. Accordingly provision ofClause 3(xv) of the Companies (Auditor's Report) order 2016 is not applicable to theCompany.
16. The Company is not required to be registered under Section 45 IA of theReserve Bank of India Act 1934.
ANNEXURE-B TO THE AUDITORS' 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 MADHAVINFRA PROJECTS LIMITED ("the Company") as of March 31 2019 in conjunctionwith our audit of the financial statements 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. 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") 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 effective- ness of internal control based on the assessed risk. Theprocedures selected depend on the auditor's judgement including the assessment of therisks of material misstatement of the financial statements whether due to fraud or error.We believe that the audit evidence we have obtained is sufficient and appropriate toprovide a basis for our audit opinion on the Company's internal financial controls systemover financial reporting.
Meaning of Internal Financial Controls over Financial Reporting
A company's internal financial control over financial reporting is a process designedto provide reasonable assurance regarding the reliability of financial reporting and thepreparation of financial statements for external purposes in accordance with generallyaccepted accounting principles. A Company's internal financial control over financialreporting includes those policies and procedures that (1) pertain to the maintenance 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 CHANDRAKANT & SEVANTILAL & J.K. SHAH & Co. |
| ||CHARTERED ACCOUNTANTS |
| ||FRN: 101676W |
| ||H.B. SHAH |
|Place: VADODARA ||M. No.: 016642 |
|Date: 05/08/2019 ||PARTNER |