The Members of Marathon Nextgen Realty Limited
Report on the Audit of the Standalone Financial Statements
We have audited the accompanying Standalone Financial Statements of Marathon NextgenRealty Limited ("the Company") which comprise the Balance Sheet as at 31stMarch 2019 the Statement of profit and loss (Including Other Comprehensive Income)Statement of changes in equity and Statement of Cash Flows for the year then ended andnotes to the financial statements including a summary of significant accounting policiesand other explanatory information (hereinafter referred to as "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 Companies Act 2013 ("the Act") in the manner so required and give a trueand fair view in conformity with the Indian Accounting Standards prescribed under section133 of the Act read with the Companies (Indian Accounting Standards) Rules 2015 asamended ("Ind AS") and other accounting principles generally accepted in Indiaof the state of affairs of the Company as at March 31 2019 and its Profit includingOther Comprehensive Income changes in equity and its cash flows for the year ended onthat date.
Basis for Opinion
We conducted our audit of Standalone Financial Statements in accordance with theStandards on Auditing specified under section 143(10) of the Act. Our responsibilitiesunder those Standards are further described in the Auditor's Responsibilities for theAudit of the Standalone Financial Statements section of our report. We are independent ofthe Company in accordance with the Code of Ethics issued by the Institute of CharteredAccountants of India (ICAI) together with the ethical requirements that are relevant toour audit of the Standalone Financial Statements under the provisions of the Act and theRules thereunder and we have fulfilled our other ethical responsibilities in accordancewith these requirements and the ICAI's Code of Ethics. We believe that the audit evidencewe have obtained is sufficient and appropriate to provide a basis for our opinion onStandalone Financial Statements.
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 for the financial yearended March 31 2019. These matters were addressed in the context of our audit of theStandalone Financial Statements as a whole and in forming our opinion thereon and we donot provide a separate opinion on these matters. For each matter below our description ofhow our audit addressed the matter is provided in that context. We have determined thematters described below to be the key audit matters to be communicated in our report. Wehave fulfilled the responsibilities described in the Auditor's responsibilities for theaudit of the Standalone Financial Statements section of our report including in relationto these matters. Accordingly our audit included the performance of procedures designedto respond to our assessment of the risks of material misstatement of the StandaloneFinancial Statements. The results of our audit procedures including the proceduresperformed to address the matters below provide the basis for our audit opinion on theaccompanying Standalone Financial Statements.
1. Adoption of Ind AS 115 - Revenue from Contract with Customers as described in noteno 2.8 of Standalone Financial Statement
The Company has adopted Ind AS 115 - 'Revenue from Contracts with Customers' mandatoryfor reporting periods beginning on or after April 1 2018. Revenue from real-estatecontracts is recognised over a period of time in accordance with the requirements of thesaid Standard using the percentage of completion method. This determination is based onthe proportion that contract costs actually incurred bear to the estimated total contractcosts and requires significant judgements including identification of contractualobligations the Company's rights to receive payments for performance completed till datechanges in scope and consequential revised contract price. The adoption of Ind AS 115 asat the transition date as per the modified retrospective method requires significantjudgement in determining when 'control' of the asset underlying the performance obligationis transferred to the customer.
Principle Audit Procedure
We assessed the management evaluation of recognising revenue from real estate contractsover a period of time in accordance with the requirements under Ind AS 115.
We tested controls over revenue recognition with specific focus on determination ofprogress of completion recording of costs incurred and estimation of costs to completethe remaining contract obligations.
We inspected a sample of underlying customer contracts performed retrospectiveassessment of costs incurred with estimated costs to identify significant variations andassess whether those variations have been considered in estimating the remainingcosts-to-complete and consequential determination of stage of completion.
We tested controls and management processes pertaining to transfer of control in caseof real estate We assessed the adequacy of disclosures included in Standalone financialstatements as specified in Ind AS 115.
2. Evaluation of Uncertain tax positions.
Refer Note No. 39 of the Standalone Financial Statements
The Company has pending disputes in respect of the Indirect Taxes which involves thesignificant judgement to determine the possible outcomes of these disputes. As at 31 March2019 outstanding demand raised by various authorities is Rs. 5125.99 which are pendingadjudication against which a sum of Rs. 459 Lakhs has been paid under protest and isincluded under "Other Current Assets".
Principle Audit Procedure
We obtained the details of demands raised up to year ended 31st March 2019 frommanagement. We have considered legal precedence and other rulings in evaluatingmanagement's positions on these disputes. We discussed with appropriate senior managementand assessed management's estimate of the possible outcome of the disputed cases. We havereviewed the disclosures made by the Company in the standalone financial Statement in thisregard.
The Company's Board of Directors is responsible for the Preparation of otherinformation. The other information comprises of the information included in the Board'sReport including Annexures to Board's report but does not include the Financial Statementsand our auditor's report thereon. Our opinion on the Standalone Financial Statements doesnot cover the other information and we do not express any form of assurance conclusionthereon. 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 in the 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 are 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 financial position financial performance changesin equity and cash flows of the Company in accordance with the accounting principlesgenerally accepted in India including the Indian Accounting Standards specified undersection 133 of the Act. This responsibility also includes maintenance of adequateaccounting records in accordance with the provisions of the Act for safeguarding of theassets of the Company and for preventing and detecting frauds and other irregularities;selection and application of appropriate accounting policies; making judgments andestimates that are reasonable and prudent; and design implementation and maintenance ofadequate internal financial controls that were operating effectively for ensuring theaccuracy and completeness of the accounting records relevant to the preparation andpresentation of the Standalone Financial Statements that give a true and fair view and arefree from material misstatement whether due to fraud or error.
In preparing the Standalone Financial Statements the Board of Directors is responsiblefor assessing the Company's ability to continue as a going concern disclosing asapplicable matters related to going concern and using the going concern basis ofaccounting unless the Board of Directors either intends to liquidate the Company or tocease operations or has no realistic alternative but to do so. The Board of Directors arealso responsible for overseeing the Company's financial reporting process.
Auditor's 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 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 Standards on Auditing will always detect a material misstatement when it exists.Misstatements can arise from fraud or error and are considered material if individuallyor in the aggregate they could reasonably be expected to influence the economic decisionsof users taken on the basis of these Standalone Financial Statements.
As part of an audit in accordance with Standards on Auditing we exercise professionaljudgment and maintain professional scepticism throughout the audit.
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 Companies Act 2013 as amended we are also responsible for expressing our opinionon whether 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 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 Financial Statements thatindividually or in aggregate makes it probable that the economic decisions of areasonably knowledgeable user of the Financial Statements may be influenced. We considerquantitative materiality and qualitative factors in (i) planning the scope of our auditwork and in evaluating the results of our work; and (ii) to evaluate the effect of anyidentified misstatements in the 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 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
1. As required by the Companies (Auditor's Report) Order 2016 ("the Order")issued by the Central Government of India in terms of subsection (11) of section 143 ofthe Act we give in the "Annexure A" a statement on the matters specified inparagraphs 3 and 4 of the Order to the extent applicable.
2. As required by Section 197(16) of the Act we report that the company has paidremuneration to its directors during the year in accordance with the provisions of thelimits laid down under Section 197 read with Schedule V of the Act.
3. As required by Section 143(3) of the Act we report that:
(a) We have sought and obtained all the information and explanations which to the bestof our knowledge and belief were necessary for the purposes of our audit.
(b) In our opinion proper books of account as required by law have been kept by theCompany so far as it appears from our examination of those books.
(c) The Balance Sheet the Statement of Profit and Loss including Other ComprehensiveIncome the Statement of Changes in Equity and the Cash Flow Statement dealt with by thisReport are in agreement with the books of account.
(d) In our opinion the aforesaid Standalone Financial Statements comply with theIndian Accounting Standards specified under Section 133 of the Act read with Rule 7 ofthe Companies (Accounts) Rules 2015 as amended.
(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 with reference tostandalone financial statements of the Company and the operating effectiveness of suchcontrols refer to our separate Report in "Annexure B".
(h) With respect to the other matters to be included in the Auditor's Report inaccordance with Rule 11 of the Companies (Audit and Auditors) Rules 2014 in our opinionand to the best of our information and according to the explanations given to us :
1. The Company has disclosed the impact of pending litigations on its financialposition in its Standalone Financial Statements - Refer Note no 39 to the StandaloneFinancial Statements
2. The Company has made provision as required under the applicable law or accountingstandards for material foreseeable losses if any on long-term contracts includingderivative contracts.
3. There has been no delay in transferring amounts required to be transferred to theInvestor Education and Protection Fund by the Company.
For Rajendra & Co
Firm's Registration No. 108355W
Akshay R. Shah
Membership No. 103316
Date: 29th May 2019
"ANNEXURE A" TO THE INDEPENDENT AUDITORS' REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF MARATHON NEXTGEN REALTY LIMITED
(Referred to in Paragraph 1 under the heading of "Report on other legal andregulatory requirements" of our report of even date)
i. In respect of its fixed assets :
a. The Company has maintained proper records showing full particulars includingquantitative details and situation of fixed assets on the basis of available information.
b. As explained to us all the fixed assets have been physically verified by themanagement in a phased periodical manner which in our opinion is reasonable havingregard to the size of the Company and nature of its assets. No material discrepancies werenoticed on such physical verification.
c. The title deeds of immovable properties recorded as fixed assets in the books ofaccount of the company are in the name of the company except for the details given below:
|Land/Building ||Total number of cases ||Leasehold/Freehold ||Gross block as on March 31 2019 (Rs. In lakhs) ||Net Block as on March 312019 (Rs. In Lakhs) ||Remarks |
|Land ||1 ||Freehold ||1.49 ||1.49 ||Unused FSI of self developed project |
ii. Inventories comprise of car parking units unsold inventory expenditure incurredon acquisition of land and tenancy rights development rights and other expenditure onconstruction and development of the project of the company. As explained to us physicalverification of the inventories have been conducted at reasonable intervals by themanagement which in our opinion is reasonable having regard to the size of the Companyand nature of its inventories. No material discrepancies were noticed on such physicalverification.
iii. The company has granted unsecured loans to Companies and a Limited LiabilityPartnerships covered in the register maintained under Section 189 of the Act.
(a) According to the information and explanations given to us and based on the auditprocedures conducted by us we are of the opinion that the terms and conditions of theaforesaid loans granted by the Company are not prejudicial to the interest of the Company.
(b) The schedule of repayment of principal and payment of interest in respect of suchloans has not been stipulated and hence we are unable to comment whether the repaymentsor receipts are regular and report on amounts overdue for more than ninety days if anyas required under Paragraph 3(iii) of the Order.
iv. According to the information and explanations given to us in respect of loansinvestments guarantees and securities the Company has complied with the provisions ofSection 185 of the Act except with respect to a transaction carried out by it with acompany in which Directors are interested as Directors and shareholders of the recipientcompany wherein the loan extended by the Company is in the nature of project advance.Maximum amount of loan outstanding during the year is of Rs. 36536.11 Lakhs and theoutstanding amount as on March 31 2019 is of Rs. 26366.14 Lakhs. As explained in Noteno. 29.1 to the Standalone Financial Statements the Management is of the opinion thatproject advance of this nature would not attract the provisions of Section 185 of the Act.
Further the provisions of section 186 of the Act are not applicable to the Company asit is engaged in the business of Real estate and Construction.
v. In our opinion and according to the information and explanations given to us theCompany has not accepted any deposits within the meaning of provisions of sections 73 to76 or any other relevant provisions of the Act and the rules framed there under.Therefore the clause (v) of paragraph 3 of the Order is not applicable to the Company.
vi. The Central Government has prescribed the maintenance of cost records under subsection (1) of Section 148 of the Act and rules framed there under. However at presentthe Company does not fall under the criteria for which such records are required to bemaintained. Hence the said rules are not applicable to the Company.
vii. In respect of Statutory dues :
a. According to the records of the Company undisputed statutory dues includingProvident Fund Employees' State Insurance Income Tax Sales Tax Service Tax CustomDuty Excise Duty Value Added Tax Cess Goods and Service tax and any other statutorydues have been generally regularly deposited with appropriate authorities. According tothe information and explanations given to us no undisputed amounts payable in respect ofthe aforesaid dues were outstanding as at 31st March 2019 for a period of more than sixmonths from the date becoming payable.
b. According to the information and explanations given to us the dues outstanding withrespect to income tax excise duty on account of any dispute are as follows:
|Name of the statute ||Nature of dues ||Amount (Rs.in Lakhs)# ||Period to which the amount relates ||Forum where dispute is pending |
|Central Excise Act 1944 ||Excise duty including penalty ||90.64 ||1991-92 1992-93 1994-95 1995-96 ||Central Excise & Service tax Appellate Tribunal (CENSTAT) |
|Central Excise Act 1944 ||Penalty ||0.15 ||1998-99 1991-92 1992-93 ||Commissioner of Central Excise (Appeal) |
|Central Excise Act 1944 ||Excise duty ||14.63 ||1977-78 1983-84 1991-92 1992-93 ||Deputy Commissioner of Central Excise (Appeal) |
|Income Tax Act 1961 ||Income Tax ||4.31 ||Asst. year 2011-12 ||Income tax Assessing Officer |
|The Maharashtra Value Added Tax Act 2002 ||Value Added Tax ||4131.10* ||2006-07 2007-08 2009-10 ||Deputy Commissioner Sales Tax (Appeal) |
|The Maharashtra Value Added Tax Act 2002 ||Value Added Tax ||430.47 ||2008-09 ||Deputy Commissioner Sales Tax (Appeal) |
^Excluding applicable interest and penalties
#Net of Amount paid under protest.
viii. In our opinion and according to the information given to us the Company has notdefaulted in repayment of loans or borrowings to financial institution or bank did nothave any outstanding dues payable to Government or to debenture holders.
ix. In our opinion and according to the information and explanations given to us themoney raised by way of term loan has been applied by the Company for the purpose for whichthey were raised. The Company has not raised money by way of initial public offer orfurther public offer (including debt instruments)
x. In our opinion based on the audit procedures performed for the purpose of reportingthe true and fair view of the Standalone Financial Statements and as per information andexplanations given to us no fraud by the Company or on the Company by its officers oremployees has been noticed or reported during the year.
xi. According to the information and explanations given to us managerial remunerationhas been paid/ provided in accordance with the requisite approvals mandated by theprovisions by the provisions of Section 197 read with Schedule V to the Act.
xii. In our opinion Company is not a Nidhi Company and hence reporting under theprovisions of clause (xii) of paragraph 3 of the Order is not applicable to the Company.
xiii. In our opinion and according to the information and explanations given to us alltransactions with related parties are in compliance with sections 177 and 188 of the Actand details of related party transactions have been disclosed in the Standalone FinancialStatements etc. as required by the applicable accounting standards.
xiv. In our opinion and according to the information and explanations given to us theCompany has not made any preferential allotment or private placement of shares or fully orpartly convertible debentures during the year and hence reporting under clause (xiv) ofparagraph 3 of the Order is not applicable to the Company.
xv. In our opinion and according to the information and explanations given to usduring the year the Company has not entered into any non-cash transaction with thedirectors or persons connected with him and covered under section 192 of the Act and hencereporting under clause (xv) of the paragraph 3 of the Order is not applicable to theCompany.
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 of IndiaAct 1934.
For Rajendra & Co.
Firm Registration No 108355W
Akshay R. Shah
Date: 29th May 2019
ANNEXURE "B" TO THE INDEPENDENT AUDITOR'S REPORT ON THE STANDALONE FINANCIALSTATEMENTS OF MARATHON NEXTGEN REALTY LIMITED
(Referred to in paragraph 3 (f) under 'Report on Other Legal and RegulatoryRequirements' of our report of even date)
Report on the Internal Financial Controls with reference to Standalone FinancialStatements under Clause (i) of Sub-section 3 of Section 143 of the Companies Act 2013("the Act")
We have audited the Internal Financial Control with reference to standalone financialstatements of MARATHON NEXTGEN REALTY LIMITED ("the company") as of 31st March2019 in conjunction with our audit of the Standalone Financial Statements of the Companyfor the year ended on that date.
In our opinion the Company has in all material respects adequate internal financialcontrols with reference to standalone financial statements and such internal financialcontrols were operating effectively as at March 31 2019 based on the internal financialcontrols with reference to financial statements criteria established by the Companyconsidering the essential components of internal control stated in the Guidance Note onAudit of Internal Financial Controls With reference to standalone financial statementsissued by the Institute of Chartered Accountants of India (the "Guidance Note").
Management Responsibility for the Internal Financial Controls
The Company's management is responsible for establishing and maintaining internalfinancial controls based on the internal control with reference to standalone financialstatements criteria established by the Company considering the essential components ofinternal control stated in the Guidance Note on Audit of Internal Financial Controls Withreference to standalone financial statements (the "Guidance Note") issued by theInstitute 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 with reference to standalone financial statements based on our audit. Weconducted our audit in accordance with the Guidance Note issued by ICAI and the Standardson auditing prescribed under Section 143(10) of the Act to the extent applicable to anaudit of internal financial controls. Those Standards and the Guidance Note require thatwe comply with ethical requirements and plan and perform the audit to obtain reasonableassurance about whether adequate internal financial controls with reference to standalonefinancial statements was established and maintained and if such controls operatedeffectively in all material respects.
Our audit involves performing procedures to obtain audit evidence about the adequacy ofthe internal financial controls system with reference to standalone financial statementsand their operating effectiveness. Our audit of internal financial controls with referenceto standalone financial statements included obtaining an understanding of internalfinancial controls with reference to standalone financial statements assessing the riskthat a material weakness exists and testing and evaluating the design and operatingeffectiveness of internal control based on the assessed risk. The procedures selecteddepend on the auditor's judgment including the assessment of the risks of materialmisstatement of the Standalone 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 systemwith reference to standalone financial statements.
Meaning of Internal Financial Controls with reference to Standalone FinancialStatements
A company's internal financial control with reference to standalone financialstatements is a process designed to provide reasonable assurance regarding the reliabilityof financial reporting and the preparation of Standalone Financial Statements for externalpurposes in accordance with generally accepted accounting principles. A company's internalfinancial control with reference to standalone financial statements includes thosepolicies and procedures that (1) pertain to the maintenance of records that in reasonabledetail accurately and fairly reflect the transactions and dispositions of the assets ofthe company; (2) provide reasonable assurance that transactions are recorded as necessaryto permit preparation of Standalone Financial Statements in accordance with generallyaccepted accounting principles and that receipts and expenditures of the company arebeing made only in accordance with authorisations of management and directors of thecompany; and (3) provide reasonable assurance regarding prevention or timely detection ofunauthorised acquisition use or disposition of the company's assets that could have amaterial effect on the Standalone Financial Statements.
Inherent Limitations of Internal Financial Controls with reference to StandaloneFinancial Statements
Because of the inherent limitations of internal financial controls with reference tostandalone financial statements including the possibility of collusion or impropermanagement override of controls material misstatements due to error or fraud may occurand not be detected. Also projections of any evaluation of the internal financialcontrols with reference to standalone financial statements to future periods are subjectto the risk that the internal financial control with reference to standalone financialstatements may become inadequate because of changes in conditions or that the degree ofcompliance with the policies or procedures may deteriorate.
For Rajendra & Co.
Firm Registration No 108355W
Akshay R. Shah
Date: 29th May 2019